Chancellor Gordon Brown’s dislike of gambling entertainment is well documented and yesterday’s budget speech contained elements designed to discourage remote gambling operators from relocating to Britain and also to hit bricks-and-mortar operators in their pockets. Before Brown’s latest budget was set before the country, it was widely thought that online operators would be encouraged to set up in Britain with a low tax rate – there was even speculation that it could be as low as 2%. The actual 15% clearly shows that Brown prefers these companies to remain offshore even though the UK will lose a share of the lucrative business.

A further shock was the 10% rise in gaming duty for the casinos making more than £10 million (US$19.67 million). This tax will now be 50% and although smaller casinos will not be affected by that, the Chancellor has abolished the 2.5% starting rate of gaming duty and raised the former 12.5% rate to 15%. The new taxation rates will start 1 April. Gaming operators have already expressed dismay over the new tax regime and analysts say that some companies may be discouraged from bidding to operate the new casinos after facing such changes to their previous estimates.

There was a small piece of better news in the Budget for AWP operators. The new £35 AWP jackpot, which previously came under Category B4 classification with an annual levy of £1,780 (US$3,502), has now become Category C with an annual levy of £735 (US$1,446). Existing duty rates have been frozen. The changes are expected to encourage investment in new equipment for the amusement market. Bingo operators were disappointed by the Budget; they had hoped that their VAT obligations would be dropped. Bingo in Britain is already suffering from the effects of the smoking ban and the industry is facing the closure of less profitable locations.

With comments like ‘insane’, ‘missed opportunity’, and ‘gobsmacked’ reverberating round the gaming industry, yesterday’s budget has largely displeased operators. Only members of the amusement industry had any kind words of thanks. Gordon Brown has already indicated that, if as expected he takes over as Prime Minister later this year, there will be no further licences for those ‘dens of iniquity’ – super casinos. In the course of one speech, the Chancellor has put back any real deregulation of the gaming industry.
(E-03.22.07)

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