UK Bookmakers Could Face a New Tax

Although most forms of gambling are licensed and thus regulated in the United Kingdom, UK gambling companies are subjected to all manner of taxes and levies, and now, according to financial analysts, they could soon face a high new gross profits tax on their fixed odds betting terminals (FOBTs).

According to global financial services firm Morgan Stanley, a soon-to-be published Gambling Commission report on category B2 machines will reveal how the UK government is seeking to alter FOBTs from a fixed tax per machine of Amusement Machine License Duty (AMLD) to a variable gross profits tax (GPT).

This could mean the difference between a fixed AMLD of 2,215 pounds and a GPT as high as 22 percent. This new GPT will not go down well with UK gambling firms, who are already unhappy with high taxes and levies. Last year, UK bookies argued that high taxes could result in job losses and even shop closures.

FOBTs in the UK are currently subjected to value added tax (VAT) and AMLD, and analysts at Morgan Stanley have estimated that if converted into GPT, this would be the equivalent of around 18 percent. However, under the government's proposal, the GPT could be increased by up to another 4 percent.

Morgan Stanley analysts have suggested the one of the main motives behind the proposed new and higher gross profits tax across fixed odds betting terminals may be the UK government's growing concern about the connection between high stakes FOBTs and an increase in problem gambling across the country.

The analysts said they did not expect the Gambling Commission report to include any concrete data to back a link between FOBTs and problem gambling, but they did suggest that the report will likely recommend further research be conducted in conjunction with the next Prevalence Study scheduled for 2010.

They suggested also that the report may recommend some immediate measures to slow down future growth in the UK's FOBT sector.