Two years ago, the UK online casino industry was rocked by the enforcement of mandatory remote gambling licences and a 15% point of consumption tax. Now, operators are preparing for another multi-million dollar wave of levies as the government looks to impose taxes on online casino bonuses and free spins.
As a result, remote gambling companies could be looking at a £100 million tax hike – one that could inevitably send smaller operations straight into the gutter. The proposal obviously isn’t sitting well with offshore gambling firms, who are already paying twice the estimated levy in existing remote gambling taxes.
The new scheme would see offshore operators licensed in the UK paying taxes against the online casino bonuses and free spins they offer to players. Promotions such as these are essential to maintaining a steady flow of new customers to their websites, while encouraging loyalty from existing membership. Online bingo promotions would also be subject to the new taxation laws.
End of Online Casino Bonuses, Free Spins?
Theoretically, customers would not feel the effects of the impending levies. UK players are not responsible for paying taxes on gambling winnings. This responsibility falls solely on the operators who provide interactive gambling services to customers. But theoretically and realistically are not the same thing.
If the UK government imposes these new tax laws, it’s inevitable that online casino bonuses and free spins will not be so readily proffered by operators. Such promotions will surely become a lot less attractive and infrequent. What was once a 100% match bonus may be reduced to a 15% or 25% match, while free spins on the pokies could disappear from existence altogether.
Marketing teams would have to come up with more unique ways to get customers into their virtual doors. Surely, bonuses will not disappear altogether, as drawing new players is quintessential to any operator’s success. But for existing members, we could see a lot more things like special VIP raffles, holiday giveaways, meet and greets with celebrities, tournament prize packages and the like.
New Promotions Tax Highly Probable
Of course, none of this is set in stone yet, but Revenue & Customs is pushing hard for the new levy on remote gambling operators, as it would bring them in line with UK sports betting operations who are already paying the tax on their bonuses and promotions. If the plan is approved, analysts estimate it will cost the online casino industry more than £100 million in additional taxes.
“The operators are not delighted about it. It’s been hard to take,” commented an industry insider who requested anonymity. “They’ve only just got used to paying Remote Gaming Duty, so this looks to them like a hidden tax rise, and it could have a disproportionate effect on the smaller operators.”
Industry Consolidation Eminent?
Experts are predicting a wave of consolidation within the industry as smaller operators who can’t afford to eliminate online casinos bonuses, or pay the taxes necessary to maintain them, get absorbed by larger operations. That was the route taken by several firms when the remote gambling levies were enforced two years ago.
Some analysts have even suggested that the UK’s largest operators may be in favor of taxing online casino bonuses and free spins. Not because they want to pay more, but because it will inevitably force consolidation and decrease competition.