Budget tax setback for casinos

The new level for the Remote Gaming Duty of fifteen per cent announced by Chancellor Gordon Brown in his budget yesterday will do little to lure offshore gambling companies to relocate to the UK.

Industry experts expected a much lower tax level of around two to three per cent, encouraged by sounds coming from the government that they plan to make the UK the centre of the remote gambling industry.

However, the new level effectively makes this impossible even if an offshore company did want to relocate in the UK. They would immediately be at a disadvantage to their competitors from the tax havens such as Gibraltar and Malta.

Clive Hawkswood, chief executive of the Remote Gaming Association, said the government "has missed a real opportunity to lead the way in terms of international regulatory standards".

Ladbrokes, which has its remote gaming business based in Gibraltar, has already stated it will not be relocating its remote gaming arm to the UK.

Land-based casinos were equally as shocked by the new tax levels. Gordon Brown increased the gaming duty from 40 per cent to 50 per cent on casinos that make more than £10 million a year. The lowest band of duty was also increased from 2.5 per cent to 15 per cent.

It is expected that the new tax levels will rake in £100 million over the next three years. The Treasury defended the move by claiming the new taxes were needed “to ensure that this vibrant and expanding sector continues to make a fair contribution to tax receipts”.

However, many experts believe that the government are hindering and contradicting their own intentions with regards to the new spate of casinos set to be built.

Damian Aspinall, Australian owner of Aspinalls Casino in Mayfair, Central London, said: "It's insane. They spend years deregulating the industry and then overtax it."

The high level of tax may now discourage operators, who were also expecting a much lower tax level, from bidding for the upcoming casino licences that are up for grabs.

“It may well discourage operators from bidding to run the new casinos. Some have probably been working on an effective tax rate of 20 to 25 per cent of duty, and I would think this change could well put that up as much as 25 per cent,” said Karen Potts, a partner of Deloitte Leisure accountants.

Penny Cobham, chairman of the British Casino Association, said that the new tax levels for land-based casinos “will threaten the regenerative benefits of new casinos anticipated by the Gambling Act”.

It now remains to be seen if casino operators will still be clambering over each other in an attempt to be part of the UK’s ‘supposed’ new gambling culture.

Editor, Jackpot.co.uk - 2007-03-22 11:14:18




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