Taxes Up and Stakes Down with B2 Gaming Machines

The Gambling Commission and the Responsible Gambling Strategy Board (RGSB) both made an appeal to the government to avoid cutting stakes on B2 gaming machines. Those in charge of decisions at the government offices weren't interested in what the two entities argued. Stakes have now been cut. They've been cut by a lot. The original rate of £100 down to £2. The drastic cut in stakes will deliver a brutal ripple effect all throughout the gaming industry. Millions upon millions of dollars shall disappear from the coffers of British racing and the revenue accounts of the Treasury and local governments.

The Impact and Motivation of Reduced Stakes

All this is simple mathematics and economics. The higher the stakes, the more money gamblers wager. The more money involved in wagering transactions, the more the gambling industry — horseracing in particular — has to gain. Taxes are levied against gambling industry profits. Cutting back on wagering stakes reduces all this.

Likely, anti-gambling forces are at work here. A reduction in stakes supposedly leads to less money lost by gamblers. Whether that turns out to be the actual case won't be revealed until a significant amount of time passes. The effect on the industry must be examined and tallied over time.

Studies conducted into methods of reducing problem gambling, at best, lead to ambiguous results. While it may seem understandable that the government wishes to enact regulation intended to cut down on problem gambling, regulating habitual behaviors hardly ranks as something easy.

The government also expressed an interest in placing time limits on how long people wager at the machines. Critics point to the doubtful potential of any results. Still, the government presses on.

Tax Increases to Follow

The government hopes that a new online tax in order to recoup some of the money lost due to the cap. Specifically, online casino and gaming operators would be required to pay more with the “Remote Gaming Duty.” Could the increase in the duty cover the lost taxes on the decreased revenue? Considering the expected decrease in revenue may be in the £50 million range just to the British racing industry, the chances of fully recouping lost tax revenue seems remote at best.

Those interested in targeting the gaming industry probably aren't interested in whether local authorities earn tax revenue any more than they worry about the gambling industry earning profits. Unfortunately for the gambling industry, there are those in government who simply aren't friendly to the enterprise. Hence, certain actions may seem outright hostile.

DCMS Secretary of State Matt Hancock actually referred to the gaming machines as a “social blight.” Even more ominously, he used the wording “put a stop to it” as a way of describing intentions. Granted, the idea that gambling machines would be completely removed from the consumer landscape seems a bit farfetched. Gambling remains a source of incredible revenue. Completely eliminating machines generating such funds wouldn't be an easy task. That said, proponents of gambling do need to be ever vigilant to deal with further harsh regulation.

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