Budget 2014 : Gambling

Stephen Hignett, Tax Partner, CMS


The increase in the rate of Machine Games Duty from 20% to 25% for machines with the highest value stakes and winnings seems to have taken the market by surprise.  Both William Hill’s and Ladbrokes’ share prices plummeted following the announcement.  What is certainly surprising is that, despite the recent media coverage, there was no mention of problem gambling in connection with this material hike in duty.  Instead we were told that such machines (FOBTs) are lucrative and therefore it’s right to raise the rate of duty.  There’s little logic behind that statement and, in fact, it contradicts the Coalition’s position on income tax (and other taxes).  For example, on the subject of taxes on pension income, the Chancellor was at pains to point out that lowering rates of tax often has the result of increasing the amount of revenue raised.  This represents another painful loss for the High Street bookmakers in the lobbying war concerning FOBTs.  Note that the rate change will not take effect until 1 March 2015.

Bingo Duty

After a string of Budgets where bingo has been the loser, bingo was today the clear winner.  The rate of Bingo Duty will be halved – from 20% to 10% – for accounting periods commencing on or after 30 June 2014.  Note that this applies only to “bricks and mortar” bingo premises; online bingo is subject to Remote Gaming Duty.  Is this too little too late for the bingo industry?  With so many bingo halls having already closed, many may think so.  It’s a shame that the Government has waited so long to provide some assistance. 

POC duty

There would seem to be very little on the new “point of consumption” (“POC”) duty in the Treasury press releases (the Chancellor did not mention it at all in his speech), other than to confirm that it will be introduced in this year’s Finance Act with effect from December 2014.  The next draft of the legislation is due to be released later this month and we are told that that revisions have been made to take account of consultation responses. Don’t hold your breath in anticipation of any effective auditing or enforcement powers.

POC licensing / horserace betting levy

The Licensing Bill (which is intended to amend the Gambling Act 2005, so that licensing for remote operators – as well as duty – will be moved onto a place of consumption footing) has now been amended to extend the reach of the horserace betting levy (the “Levy”) to those operators who will (under the new regulatory regime) require a licence from the Gambling Commission.  Put simply, this is an extension of the Levy to bookmakers located outside of Great Britain who take remote bets on British horseracing.  Whilst the Government’s objective here is to level the playing field between those operators who are within / outside of Great Britain (being similar to the objectives behind the POC duty), this extension of the Levy with surely re-ignite concerns over State Aid.  If that concern comes to fruition, the horseracing industry will be hoping that Levy reform (including perhaps the “racing right” to which the Chancellor referred in his speech) happens sooner rather than later.

Gaming Duty

As is the norm, the gross gaming yield thresholds regarding Gaming Duty (which covers bricks and mortar, rather than online, casinos) will be increased line with inflation.  This will take effect for accounting periods starting on or after 1 April 2014.


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