Betting exchanges tax reform ruled out

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Chancellor Gordon Brown stated in the Pre-Budget Report that current taxation arrangements for bookmakers and betting exchanges are working well and will stay in place.

The announcement represents a defeat for the “Big Three” which expected some form of additional taxation on betting exchanges.

“We are disappointed the playing field has not been levelled. We hoped they might have listened to our arguments,” said Alan Ross, Ladbrokes’ Managing Director.

“There was no logical argument for doing anything else,” commented Mark Davies, Betfair’s Director of Communications.

“All bookmakers are charged on gross profits. Whether you use technology or not, whether you are in the high street or on the internet, you make money as a betting operator by paying out less in winnings than you take. That we do it on a lower margin having invested in technology has nothing to do with it. It’s not a tax on risk taking, technology or turnover – it’s a tax on gross profits,” he added.

The online betting community at large was eagerly awaiting an announcement regarding the introduction of a new tax rate specific to online operations, but the report stated that “the rate of this new duty will be set in next spring\’s Budget.”

A significant change for the land-based betting industry regarded the reclassification of Fixed Odds Betting Terminals as gaming machines. This will bring FOBTs into the current gaming machine regime (i.e. VAT and amusement machine licence duty). Bookmakers have yet to estimate how much the change would affect their earnings, but industry\’s analysts suggest it will have a marginal impact.