Philip Hammond is set to increase the tax paid by offshore gambling companies in his Budget later this month, in a move that will infuriate the industry.
The chancellor has drawn up plans to increase the so-called remote gaming duty paid by overseas operators who offer online casino-type games such as blackjack, according to government aides, a move that would raise about £1 billion over five years.
The money will help to fill a fiscal black hole left by the government’s decision to crack down on the fixed-odds betting terminals that are played in high street bookmakers.
Ministers announced in the summer that they would cut the maximum FOBT stake from £100 to £2 in a bid to tackle problem gambling after a prolonged row within Whitehall. Some figures inside the government argued persistently that the move could prove costly for the exchequer given that FOBTs account for annual taxes of about £400 million on revenue of £1.8 billion.
In the end Mr Hammond gave the go-ahead to Tracey Crouch, sports minister and main advocate of the FOBT action, on the basis that any tax revenue gap would be plugged elsewhere.
Mr Hammond is expected to announce a range of revenue-raising measures on October 29, as he seeks to present a Budget that will pave the way for an end to years of austerity.
The gaming industry is braced for Mr Hammond to lift the remote gaming duty from its current level of 15 per cent of “gross gambling yield” — a measure of profit — to 20-25 per cent. FOBTs are currently taxed at 25 per cent. That could be enough to raise about £1 billion over half a decade for the government’s coffers.
The remote gaming duty was originally brought in several years ago as a way to level the fiscal playing field between UK-based gambling groups and their competitors offshore. It applies to the gross profits of any gambling company with UK-based customers.
Some of gambling's biggest operators have set up online operations based in Gibraltar, including Ladbrokes and William Hill. "This means it's a double whammy for UK operators because they'll be hurt by the FOBT move and now this as well," said one industry executive.
The government took action on FOBTs because some gamblers were losing thousands of pounds a day, betting up to £100 every 20 seconds on games such as roulette.
Separately, it will launch a multimillion pound advertising campaign to promote responsible gambling while Public Health England will conduct a review of the evidence relating to the damage to public health from gambling.
Ministers are also carrying out a review of the age limit for playing National Lottery games as part of the next licence competition to consider the risk of harm to young people.
They have also ordered the Gambling Commission to toughen up protections around online gambling, including stronger age-verification rules.
The government brought in the remote gaming duty in 2014, insisting that any operator who took bets from UK-based customers had to be licensed by the Gambling Commission. At the time ministers expected to raise £300 million a year, but the industry believes the figure is now about twice that sum.– Copyright The Financial Times Limited 2018.