UK to tax gaming free plays

UK-facing casino and bingo sites will see their tax bills rise after Chancellor George Osborne this afternoon announced plans to abolish the tax-free status of gaming free plays.

Delivering his Budget, Osborne said the government would start to tax free plays having previously maintained their tax-free status when implementing the Point of Consumption levy in December 2014.

The move, which will come into effect on 1 August 2017, will place gaming tax in line with sports betting, which currently sees free bets taxed the standard 15% General Betting Duty (GBD) rate.

“Remote gaming operators currently benefit from a more generous tax treatment when they offer discounted or free gambling (‘free plays’) to customers in Remote Gaming Duty than would be the case for operators offering free bets on things like football and horseracing,” the Chancellor’s supporting document read.

“The government will therefore amend the tax treatment of free plays in Remote Gaming Duty to bring it into line with the tax treatment of free bets in GBD.”

When the PoC rules were developed in 2014, many bookmakers complained that free and discounted bets should not be subjected to tax, pointing to the fact that gaming free plays and spins were exempt.

At the time the government decided to retain the status quo as they were seeking only to change those elements of the rules that would tax remote gambling on a point of consumption basis.

Stephen Hignett, Olswang tax partner, described the move as “bad news” for the industry but felt the long lead in handed operators enough time to alter their bonusing strategy.

“Whilst it’s not yet clear, one assumes that this will result in both free spins and bonus credits becoming subject to remote gaming duty,” Hignett said.

“Slightly better news is that the new rules will not come into effect until August 2017, which gives operators 17 months to consider how their player incentives may need to change before the new rules come into effect,” he added.

Ladbrokes said that while industry had been expecting a change to betting and gaming duties, the change to free plays came as something of a surprise.

“One of the more obvious bets this week was that the sector would be targeted but this was probably not on everybody’s race card as the obvious choice,” a Ladbrokes spokesperson said.

“I’m sure we will all be sitting down to work out its long term impact and as ever in a change in tax or regulation, it will take a bit of time to work out all the implications.”