UK high street bookmakers such as Ladbrokes and William Hill saw their share prices continue to drop on the London Stock Exchange after the government revealed its 2014 budget, announcing that Machine Games Duty on fixed odds betting terminals would rise from 20% to 25%. The sharp rise in duty on machines offering the highest stakes has been described as a “painful loss” for bookmakers.
The news comes as a blow for UK bookmakers as they struggle to organize their companies ahead of the new Point of Consumption tax that will come into affect at the end of the year. The government ruled that tax will need to be paid based on the physical location of the player (point of consumption) and not where the online gambling operator is located. A number of bookmakers left the UK to relocate their online operations in tax-friendly havens such as Gibraltar several years ago, mainly to escape Britain’s high taxation rates. Now, however, they will need to reconsider the economic viability of remaining in Gibraltar since they will be taxed based on where their players are located. The new POC tax comes hand in hand with new laws that require all operators who have UK customers to carry a license by the UK Gambling Commission.
Experts predict that these changes to the Gambling Act will negatively impact the economies of places like Gibraltar, and will also see more players heading to unregulated online gambling sites.