Poll: What will the 15% tax mean for the UK?
Will operators come out fighting and will it be a case of combine or combust for the smaller players?
The UK egaming sector is bracing itself for the biggest changes since the introduction of the Gambling Act in 2005 with a new tax on gross revenues set to be introduced by December 2014. The announcement from the UK Treasury of the 15% remote gaming tax rate may have surprised nobody, but it marked the end of the speculation and the start of the planning. The question is what can the industry expect as a result of the new operating environment.
The biggest change will be the introduction of a gross profits tax on online gaming (poker, bingo and casino) for the first time. UK-based companies currently pay a 15% gross profits tax on all sports betting, but even for the likes of Sky Bet and bet365 all gaming is based offshore. The hit to the bottom line will be felt even harder by the likes of William Hill, Coral and Ladbrokes who moved their sportsbook business to Gibraltar where the gaming tax is considerably lower.
But while that’s the operational impact, what will be the more subtle implications of the move by the UK government? Most of the talk so far has been of a potential move back onshore by the big egaming operators, and that will dominate the disucssions over the next 12 months no doubt. But there are other more interesting things to consider.
Will the smaller operators struggle to absorb a substantial hit to the bottom line? How will the bigger operators adjust their strategies to cope with the 15% tax rate? Will we see a marketing blitz to blow the smaller players out of the water or will more sober heads prevail? Or perhaps will we see little change beyond a decrease in profits as the industry has learned to cope with these types of moves from France, Italy and Spain.
Cast your vote and let us know what you think on the right hand side of the page.