The British Chancellor of the Exchequer, George Osborne, delivered the 2016 Budget on Wednesday and alleviated the fears of some of the United Kingdom’s biggest bookmakers that he was going to impose new gambling taxes on them.
Shares in Ladbrokes fell five percent on Monday, with shares in William Hill falling 2.3 percent, following speculation that the Chancellor was about to increase duties on Fixed Odds Betting Terminals, often dubbed “the crack cocaine of gambling” in the anti-gambling lobbies, but this was not the case. Instead, the free bets offered by online casinos and bingo sites are being taxed from August 1, 2017.
The Budget document reads:
“Remote gaming operators currently benefit from a more generous tax treatment when they offer discounted or free gambling (‘freeplays’) to customers in Remote Gaming Duty than would be the case for operators offering free bets on things like football and horseracing. The government will therefore amend the tax treatment of freeplays in Remote Gaming Duty to bring it into line with the tax treatment of free bets in General Betting Duty.”
Remote, or offshore, gambling companies pay a 15 percent Point of Consumption Tax on gross profits generated from wagers placed by residents of the United Kingdom. They will now pay the same 15 percent tax on the free bets.
Investors in Ladbrokes and William Hill reacted positively to the Budget announcement. Shares in Ladbrokes rose by 5.92 percent to 121.70p with shares in William Hill increasing by 3.94 percent to 379.60p.