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21 July 2011
Bingo News: Shares fall as Bookmakers take a hit following UK Government proposal to change online gambling tax
UK based Bookmakers are under pressure following the news that the Government will be altering the way it taxes foreign gambling companies who offer their services to UK based clients.
Betfair, William Hill and Ladbrokes were amongst the Bookmakers who saw their shares fall after analysts warned they could stand to face a 15 percent tax on their web based profits if this new tax scheme goes ahead.
UK based operators already pay 15 percent gross profits tax and it's thought that a similar rate will be imposed on remote gambling. Taxation on remote gambling will come under review after John Penrose, the gambling policy minister said that taxation should cover the location of consumption.
Some industry insiders think that this may be unsuccessful as offshore operators could always continue to offer their services to UK customers but refuse to pay the tax. There have since been calls for onshore taxes to be reduced for UK based operators, which may be taken to the Treasury for review.
Richard Glynn, CEO at Ladbrokes, agreed with this way of thinking and said: "UK-based online and retail businesses have long been at a significant tax disadvantage in competing with offshore operators," he said. "We believe this is an opportunity for the Treasury to reconsider the high levels of tax applied to UK gambling operators as well as which rates could be applied to offshore businesses who will continue to enjoy VAT benefits."
William Hill shares dropped 2.2 to 217.6p, Ladbrokes dropped 4 to 139.2p and Betfair was down 30.5 614.5p. Analysts believe that major players would most probably benefit from the tax changes in the long term as smaller competitors would cease to be following the increase of taxes. It could take up to 2 years to implement as new legislation would need to be passed by Parliament first.
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