The UK government announced it will revise its plan to tax online casino and bingo free plays. Online casino and bingo operators had opposed a plan announced in March to end their exemption from the 15 percent general betting duty imposed on free or discounted online sports or race bets. The change was scheduled to take effect August 1, 2017. Previously, in 2014 the 15 percent online point of consumption tax on gambling revenue had been imposed. Also in 2014, the Machine Games Duty rose from 20 percent to 25 percent for bookmakers with retail betting operations.
Her Majesty’s Revenue & Customs held technical consultations with online operators regarding the free play tax. Operators expressed concern over free play offers that include re-wagering rules; these require customers to play through their winnings to a pre-determined value or multiple before they can withdraw these winnings.
The draft legislation said free plays that would be subject to re-wagering requirements would be treated as taxable gaming payments each time they’re played. But winnings that accumulate during re-wagering can’t be deducted from the tax calculation until the player has met the rollover requirements and is allowed to withdraw the winnings.
Operators claimed taxing all free plays the same would impose an “unacceptably high tax burden that could severely damage the market.” They said it would impact existing operators and also keep new market entrants from gaining a foothold through free play marketing.
Ultimately HMRC said it could achieve its online free play goals by “taxing the first use of free plays only.” Winnings will “only be brought into the duty calculation at the end of the re-wagering process,” it determined.
HMRC also declared games that are free to play for all participants will not be subject to the remote gaming duty, and prizes won from these games will not be subject to the duty calculation.
HMRC said the August 2017 timeline for the changes is “reasonable,” and urged operators to back down from requesting an extension.
