Foreign-Based UK Gaming Operators to Experience a Tax Increase

In an attempt to compensate for the loss of income related to changes in the nation's system of legalized gambling, the British government has announced plans to place higher taxes on offshore gaming.

Chancellor Phillip Hammond is expected to increase duties on foreign-based companies that offer online casinos, blackjack and other games of chance. The new policy could, over a period of approximately five years, increase revenues by more than 770 million pounds, the equivalent of around $1 billion. This increase should compensate for revenue losses related to a previous decision to lower the limits on fixed odds betting terminal (FOBT) gambling machines.

Previously a lucrative source of income for both the gambling establishments and for bookmakers, FOBT betting had also been beneficial to the British government, which had annually taken in some 400 million pounds, or about $520 million, from these terminal-type games. However, this revenue dropped dramatically after the maximum stake allowed in FOBT betting was reduced from 100 to only 2 pounds. This change was championed by British Sports Minister Tracey Crouch, who expressed the belief that the lost revenues could be found elsewhere. This adjustment will be made by raising the tax on remote gambling companies from 15 percent to somewhere between 20 and 25 percent.

The system of remote gambling was established for the purpose of creating greater fairness between domestic and offshore operators. Some of these companies set up their terminal systems in Gibraltar. Concern has been expressed by some observers that the increased taxes will further harm these operators, especially when considering that they are currently suffering from a reduction in their profits.

In addition to the changes in the tax structure, the online gaming industry is facing other restrictions designed to tackle the problem of habitual gambling. FOBT systems are known to cost some gambling addicts thousands of pounds every day, possibly as much as 100 pounds in only about 20 seconds. This issue is being tackled with an advertising campaign designed to highlight the risks of excessive gambling.

Some members of the British Parliament are examining the manner by which the gaming companies themselves advertise, recommending an end to television commercials during live sporting events. There is fear that such advertising could influence underage individuals, making gambling appear to be a normal and thus desired activity.

Additionally, government officials are examining the possibility of including an age limit on those who participate in the British National Lottery. Some observers believe that such action is needed when considering the recent increase in gambling activity by young Britons.

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