Simplifying gambling taxes in the UK: A streamlined tax system for gambling businesses set to take effect
The UK government is considering a significant change in the taxation of remote gambling, with plans to introduce a unified tax rate of 50% for operators' profits. This proposal, if implemented, would mark a substantial increase from the current rates, causing concern within the industry.
At present, the tax system is tiered. Remote betting and pool betting are taxed at 15% of the gross gambling yield (GGY), online gaming, including remote gaming, is taxed at 21%, and gaming machines are taxed at 20% of the operator's profits [2].
The proposed changes would see the remote gaming duty rise from 21% to 50% of operator profits, and the tax on gaming machines would also increase from 20% to 50% of operator profits [1][3][5]. Moreover, some calls suggest increasing the betting duty from 15% to 30% [4], representing a considerable tax hike, more than doubling tax rates in some categories.
The Betting and Gaming Council (BGC) strongly opposes these proposals, arguing they are economically reckless and risk pushing punters to the unregulated black market without consumer protections [3].
In contrast, Germany's land-based arcade operators pay taxes ranging from 5% to 25% depending on the machine class, and online gambling is taxed at a lower rate of 5.3% [6]. However, German arcade operators are subject to double taxation, with a 19% VAT on each bet and an additional 10% to 13% entertainment tax [7].
The UK Gambling Commission, unlike its German counterpart, uses fines collected from illegal gambling activities for a good cause [1]. The Office for Budget Responsibility has clarified the different tax treatments of gambling on its website [8].
The future tax rate for remote gambling in the UK is speculative but expected to remain at least 15%. The government is planning to discuss a unified tax rate for remote gambling, aiming to eliminate multiple taxation [9].
Land-based gambling providers are not affected by the proposed changes and continue to have individual taxes depending on the type of gambling and sometimes the stake and win amounts. Online slot machines in the UK are taxed at a rate of 15% under the Remote Gaming Duty, while land-based slot machines are taxed differently [10].
For 2023/24, the expected gambling tax revenue in the UK is forecast at £3.5 billion (around €4 billion) [11]. High tax revenues and social contributions are part of the UK's long-term gambling strategy.
| Category | Current Tax Rate | Proposed Tax Rate | |------------------------|--------------------------|----------------------------| | Remote gaming duty | 21% (of profits) | 50% (of profits) | | Remote betting duty | 15% (of GGY) | 30% (proposed in some calls)| | Gaming machines duty | 20% (of profits) | 50% (of profits) |
This proposed unified rate of 50% for remote gambling represents a substantial increase compared to current rates, with significant industry concern about potential negative consequences [1][3][4][5].
Online casinos in Germany, with their finance being subject to a lower tax rate of 5.3%, contrast starkly with the proposed 50% tax on operator profits for remote gambling in the UK, causing concern within the industry. The increase, if implemented, would mark a substantial leap over the current tax rates of 21% for remote gaming duty and 20% for gaming machines duty in the UK.
