UK Wants to Raise Online Gambling Tax in 2019, Allowing for Delay in FOBT Cuts

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The UK government now plans to delay cutting the maximum stakes of fixed-odds betting terminals (FOBT) down to £2 ($2.65) until 2020, but the online gambling tax rate could increase as early as 2019.

FOBT online gambling tax
The UK government will delay the implementation of lower FOBT limits until 2020, but may still increase the online gambling tax rate in 2019. (Image: PA)

At the moment, online gambling in the UK is subject to a 15 percent point of consumption tax. There is no word on how large the increase on that rate is expected to be at this time.

Follow the Money

The FOBT limits and the online gambling tax are connected in one key aspect: the amount of money that will come in to the UK government coffers. While government officials had hoped to implement the new limits by next year, that plan raised alarm bells over at the Treasury, where they feared a loss of revenue from the lower stakes.

Meanwhile, an online gambling tax had already been proposed as a way of offsetting these losses. Under the new agreement between the government and Treasury, it now appears that there could be a year of double-dipping, with the Treasury collecting both a higher rate from online gambling operators and still benefitting from the £100 ($132) maximum bet on FOBTs.

Labour Party lawmakers slammed the decision, saying that there was absolutely no reason why the new limits had to be delayed for two years.

“Capitulating to a two-year delay is a pathetic move from a fundamentally weak government,” said Labour deputy leader Tom Watson. “Those who praised the government when the announcement was made will feel badly let down.”

Target Date Still Unconfirmed

The Treasury didn’t confirm that April 2020 would now be the target date for implementing the £2 limits, but they did defend the decision to delay the move.

“We are changing the rules so they balance the needs of vulnerable people, those who gamble responsibly and people who work in this sector,” Treasury said in a statement. “But we must get this right, and are engaging with the industry to ensure it has sufficient time to implement these technological changes.”

According to the Association of British Bookmakers, having extra time to adjust could help them avoid some of the job losses and shop closures they have maintained would be a consequence of the loss in revenue betting firms were facing due to the FOBT cuts.

While the reduction in the maximum bets on FOBTs has been a major topic of debate in the UK, the upcoming change to online gambling taxation could be a bigger issue for poker players.

If the increase in the online gambling tax is significant, operators are likely to pass along those costs to their customers. In many regulated markets with high tax rates, such as France, players have paid accordingly higher rakes. For instance, PokerStars in France has historically charged a 6.5 percent rake on cash game pots, though that dropped slightly (to 5.75 percent) when the French and Spanish player pools were merged earlier this year.

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