Online Casino Competition Under Threat?

Online Casino Competition Under Threat? ( Click to Enlarge )

Will UK tax hike hinder online casino competition? Chancellor Philip Hammond set UK gambling firms reeling at the end of October with the news that Remote Gaming Duty will rise from 15 per cent to 21 per cent from next autumn. While it will take a little time to see the effects, already experts are warning that competition will reduce, punters may lose out and there will be a significant structural impact upon the industry.

Tax Hike

The tax hike, which applies to online casino games, is intended to help fund a crackdown on fixed odds betting terminals which have been widely criticised by gambling campaigners for some time.

The government will use the increased cash raised from taxing the likes of online poker and blackjack games to offset the cost of reducing the maximum stakes for the gambling machines.

The tax rise of 6 per cent was higher than many industry observers had expected. Some believe that a figure of even 20 per cent would have staved off the threat that some firms may decide to pack in and exit the market.

Introduced in 2014, Remote Gaming Duty applies to all bets made by UK-based customers regardless of where in the world they placed their stake.

Smaller Operators Squeezed

The likely impact will be that some smaller operators will indeed conclude that the tax rise means their revenues are squeezed too hard to make it worth their while continuing. But further, there will likely be a wave of mergers and acquisitions as firms realign themselves to take account of the hike.

All of that will mean less competition and ultimately less choice for customers with the potential for poorer odds and returns. UK tax rises follow hot on the heels of similar hikes in the Republic of Ireland and Poland which only increases the impact upon operators whose business is spread across Europe.

There was some good news last month when Portugal scrapped plans to impose a 25 per cent flat tax on online gaming revenue, but with the Portuguese budget not due until late November, it remains unclear what proposals will replace it.