UK Treasury Effect of Gambling Duty

On Aug. 13, UK Treasury reported on provisions in finance act 2019.

  • Report into public health effects of two gambling duty provisions in finance act 2019.
  • UKP requested that UK Treasury provide a report into the public health effects of the two gambling duty provisions in finance act 2019 within 6 months of its Royal Assent.
  • Finance Act 2019
  • Provisions, contained in sections 62 and 63 and Schedule 18 are described as follows.
  • Section 62 increased rate of remote gaming duty from 15% to 21% from Apr. 1, 2019.
  • From Oct. 1, 2019 section 63, Schedule 18 remove need for casinos to pay on account and allow them to carry forward losses to offset against future Gaming Duty liabilities.
  • Remote Gaming Duty
  • Increase in RGD falls in first instance entirely on providers of remote gaming, as a tax.
  • 21% is taken from difference between gaming payments to provider and prizes paid.
  • To preserve profits provider can either accept reduction in net profit or increase price.
  • In gambling, an increase in price is in effect a decrease in prizes returned to players.
  • There are further complexities to a provider’s decision in that in some common games of chance, the provider’s advantage cannot be increased without changing the game.
  • European roulette’s house advantage is 1 in 37, to change that means it is no longer European roulette (American roulette has two zeroes, provider advantage of 1 in 19).
  • Increasing the provider’s advantage requires the provider to have its game recertified by an independent testing organization to ensure player protections are respected.
  • Adds further layer of cost, time to decision on whether to increase provider advantage.
  • Industry indicated providers would not respond by increasing the provider advantage.
  • If that is the case, then players would not be expected to notice any difference in the games played which means that a change in player behaviour would not be expected.
  • If some providers could no longer remain profitable at new tax rate, this could result in further consolidation in the market and potentially some attrition from remote gaming.
  • However, UK GVT costing models did assume that there would be some pass-through of increased rate of tax into increased provider advantage on non-fixed odds games.
  • Higher prices/increased provider advantage would be expected to mean some players no longer wished to carry on remote gaming, overall spend would expected to be less.
  • Government has limited information on real-world effect of RGD change, but overall consumer spending on remote gaming increased 2.9% in the year ending Sep. 2018.
  • Insufficient evidence to conclude impact on public health from RDG increase/decrease.
  • A reduction in remote gaming spending may indicate a reduction in harms, but this will depend on whether the reduction has come from consumers with gambling problems.
  • Gaming Duty
  • Gaming duty now closer to alignment with the other gambling duties by removing the requirement for payment on account halfway through six-month accounting period.
  • Can carry forward losses in one accounting period against liabilities in the next period.
  • No change to tax rate or tax base and UK GVT expects limited use of carry forward of losses, as uncommon for casinos not to make a gambling profit over 6 month period.
  • Change is not expected to impact on individuals nor knock-on effects on public health.
  • Given report timing, commencement of changes on Oct. 1, 2019, no data is available.

Regulators UK Treasury
Entity Types Auditor; Gambling
Reference PR, Rp, 8/13/2019; FA 2019
Functions Accounting; Financial; Reporting; Risk; Tax; Treasury
Countries United Kingdom
Products Corporate
Regions EMEA
Rule Type Guidance
Rule Date 8/13/2019
Effective Date 8/13/2019
Rule Id 63848
Linked to N/A
Report Issue 8/15/2019
Report Section UK

Last substantive update on 08/14/2019