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Gaming Tax Online: UK Government Plans to Increase in 2019

Posted by steve_k on in Bingo, Blog, News / 2 Comments

The UK government has passed a bill that is set to increase the point of consumption (POC) tax to all online gaming platforms as of 2019. Since the UK government has an obligation to level the playground for both its citizen who gambles as well as the online gambling companies, therefore they decided to raise the POC earlier before they initiate their earlier proposed fixed odds betting terminals (FOBT) maximum limits that are scheduled to start on April 2020.

gambling taxThe owners of online casinos seem not to be satisfied by the government’s decision claiming that it will limit on their profits. The government will announce the new POC tax rate before the end of this year.

These new changes on the gambling industry have resulted due to an investigation that was carried out in October 2016 by the competition and markets authority (CMA) to ensure that these gambling companies operate responsibly in accordance to the consumer protection law.

As a result of this investigation, new rules have been suggested in order to create fairness and protect problem gamblers in the gambling sector. On May 2017, the government said that is intending to lower the limits for maximum stakes on FOBT to £2 from the currently set price £100. These FOBT limits pose as a major setback for the online casinos in terms of profits and job loss that is expected to hit them immediately after its implementation.

In 2016 about £4.7 billion gross revenue was generated from the online gambling sector in which this was an approximate of 34% of all money that generated in the gambling economy. With that said if an immediate FOBT implementation will have to take place, the central government will also be affected since it will have reduced the amounts of revenues expected to be collected from online gambling. In addition to that, the issue of FOBTs limits raised major concerns from all shareholders because of its side effects to the overall economy. Due to the treasury concerns about unemployment levels and reduction in revenues, they opted for a raise in the POC taxes and postponing the implementation on FOBT limits.

Other countries like France, Spain, and Australia have already implemented a high tax rate on gambling companies, but as at now, the POC tax in the United Kingdom stays at a 15% rate. Some critics claim that it is a selfish move by the government in the fear that there might be a loss in the budget so raising tax was a way of guaranteeing high revenues before initiating the FOBT limits.

The rise in tax will affect all online casinos whether operating from inside or outside the country as long as your players are from within the UK. It is very evident that this will, in turn, have to make these online gambling firms to raise prices of their odds. Therefore, the effects of increasing the tax will as well be felt by online gamblers since their customers will be the ones financing their burden. The two-year delay between the implementation of the FOBT limits and the POC tax increase would be necessary in avoiding massive instant loss of jobs or closure of the online gambling sites.

The CMA and the gambling commission are in the forefront to ensure all online gambling firms are aware of these new regulations and are ready to monitor all operations as from next year to ensure all online gambling firms comply with these regulations. The government treasury argued that the increase in POC duty would be the key solution to cover any negative impact brought about by the FOBT regulations such as protecting jobs of its citizens who work for online gambling firms and stopping the machines ruining lives of problem gamblers.

A Whopping £13.4 Million Annual Breakdown by Betfred Company

Posted by martha on in Bingo, Blog, News / 1 Comment

The yearly loss has hit the Betfred Company despite the tireless effort to increase the revenue. The loss amounts to a total of  £13.4 million.

Analysts had earlier estimated GBP 90 million and a 3% improvement annually of the player base that is growing. Despite all the expected value, the Betfred made incredible loses.

Revenues as at September 24, 2017, at the privately –held bookmaker, had risen to a total of £634.5m in twelve months. The earning also improved by 3% per year to £83.3m. The Betfred retail business achieved a 17.5% turnover for the total gambling. This amounted to a total of £12.7bn.

Regulus partners reported that revenue earned online by the Betfred company increases on a yearly basis by 3% to a total of £90 while that of Tote hiked by  £12 to £329m.

Moreover, the Betfred enjoyed a profit of £32.4 m in the last year. However, despite the great success achieved in the fiscal year, Betfred is hit by an eight-figure loss. The company, therefore, blames the reduction of the goodwill on the digital assets that were impaired, higher duties of gaming, as well as rising costs for the, losses they made.

The improvements on the revenues came through the company’s efforts to add betting shops, the Totepoool business of signing a blending deal with the Jockey Club of Hong Kong and the rise of the online customer base that is unspecified. Furthermore, the anti-gambling suspects found in the United Kingdom media reported that the founder of the Betfred Company has chosen to take £10.2m dividend per year just like the divided he took up last year.

Regulus partners who are analysts predicted some of the challenges that are to face the Betfred Company as a result of the government’s plan. They suggested that the regulation changes that are to be implemented FOBTs will significantly affect the company’s revenues.

Therefore, the media notes that the Betfred Company reported that it is going to shut down nearly 900 betting shops and also fire around 4500 employees if the government implements its plan to cut the final Fixed Odds Betting Terminal stakes (FOBTs) from £100 to £2. The proposal by the UK government is meant to solve the problem of gambling.

The managing director of Betfred Company, Mark Stebbing however, urged the government to make changes to its plan because it would lead to massive loss of the job. Moreover, that would reduce the government’s tax that is generated through the gambling taxes. Stebbing further says that the government should have evidence before taking any action. Therefore, responsible gambling will remain the priority in the industry and the government should realize that the stakes take the first position when it comes to jobs.

Regulus Analysts reported that 83% of the company’s earnings are generated at the retail operations where the FOBTs reside. If the government’s plan will be executed, the FOBTs has to exert pressure on the Betfred Company. Out of this report, the Regulus Partners suggested that

Betfred core business is most likely to undergo necessary structural changes.

Despite the underlaid plans by the government to reduce the maximum stake on the Fixed Odds Betting Terminals (FOBTs), it has announced that the stake cut will not take place until the year 2020.

Fred Done the founder of the Betfred Company, during the last year in September, he announced of a broken association with the racing industries because of the many years of continuous disagreement between the betting company and the racing industries. During the last month, Fred declared a deal with the Alizeti Capital to be the initial stage in depriving its Tote holdings.