UK bingo industry divided on 10% duty
Mixed response from online bingo operators following announcement land-based sector will be subject to 5% lower tax than online
UK bingo operators were caught off guard yesterday after UK Chancellor of the Exchequer George Osborne announced the government is to halve bingo duty on land-based bingo halls from 20% to 10%.
At the same time, the government also confirmed the UK Point of Consumption tax (PoC) on remote operators would be set at 15%, meaning online operators will now pay 5% more in taxes on profits than their offline brethren.
Joe Saumarez Smith, chairman of Bede Gaming, said he was surprised by the announcement and believes there should be a single tax for online and offline bingo activities, which should also be extended across other verticals.
“Online bingo is very bonus driven and from my understanding not all bonuses will be exempt under PoC so this has the potential to have a huge impact on the online sector,” he said.
“For bingo, particularly when compared to other gaming verticals, the devil is always in the detail,” Saumarez Smith added.
The Treasury is expected to place a cap on bonus incentive schemes offered which could have a significant impact on operators for which bonuses count for a significantly larger proportion of GGR.
However Dan Waugh, strategy director at Rank Group, told eGaming Review the company was pleased with the outcome and felt it would be unnecessarily complicated to bring the online and offline taxes in-line.
“This has taken us by surprise but we believe the outcome is completely reasonable and we are happy with the tax situation,” Waugh said.
“Our criticism in the past was that bingo halls shouldn’t pay higher taxes than the online sector but we are now content with the new rates,” he added.
John Hagan, a partner at law firm Harris Hagan, also believes aligning online and offline taxes would be the wrong move for the industry given the variations seen in other verticals.
“Arguing for remote bingo operators to be subject to the same 10% tax as land-based operators is a dangerous game, particularly for remote operators offering the full spectrum of gambling products, especially when you consider that land-based casinos pay duties of as much as 50%,” Hagan said.
“The online and offline industries are different animals and different considerations apply,” he added.
The 10% land-based bingo duty announced yesterday came after the chancellor saidhe had seen the number of bingo halls “plummet” by three quarters over the last 30 years.
“Bingo operators identified a programme of investment that would be freed up by a 5% tax reduction,” Miles Baron, chief executive of The Bingo Association, said.
“Now that we have secured a 10% reduction, operators will be relooking at their investment and modernisation plans, to stimulate the industry,” he added.
Following the announcement Rank Group said it would significantly increase its investment in the retail sector including the launch of three new bingo clubs as well as saving a number of clubs from proposed closure.
“[The] announcement is an important boost for Britain’s bingo clubs, which provide a range of social and economic benefits for the communities they serve,” Rank Group chief executive, Ian Burke, said.
The Rank Group share price opened yesterday at 144.10p and closed at 154p.