Consumption Tax To Affect Bingo Players

In the last couple of years we’ve seen many changes to gambling taxation as the government try and keep tabs on what is a massive growth industry. Land Bingo halls haven’t fared well and are liable to pay a 20% tax levy, a great deal for an industry already struggling and adding to the lost bingo halls list by the month, but until now, online bingo has been virtually exempt thanks to the point-of-supply basis of the levy. Point-of-supply means that each bingo site is liable for taxation depending on where they are based, and that’s led to almost every bingo company out there basing their offices in tax havens such as Gibraltar, Alderney and Malta. However, a change from point-of-supply to consumption may leave the bingo industry with a big bill, and a big headache as they attempt to implicate the changes.

Thanks to the offshore status, online operators end up paying far less VAT and this is creating an uneven playing field, giving an unfair advantage to online operators, as stated in the case put forward by big operators such as Coral and Ladbrokes. The consumption tax, which will see tax paid at the point of the bet, not at the point of supply is hoping to even that out, but no one is too sure how it will be levied.

What the act will mean is that instead of bingo sites being able to avoid tax by having their operations offshore (a loophole taken advantage of by 90% of online gaming operators), each operator will have to pay tax at the point of consumption. What that means is that if an offshore operator runs a site for a UK marketplace, the UK tax will be levied for all UK players at the site, but not players who are based in other countries. How are these changes likely to affect the customers as the tax comes into play?

Firstly it could mean many smaller brands simply vanishing from the marketplace as they struggle to keep up with the new taxation, and it’s been predicted that number could be more than a quarter of the entire bingo market. Now players will know that the said market is rather saturated, and so that may not be a bad thing for players, although obviously it’s not great for operators already struggling in a busy marketplace.

It’s not the only way that players will be affected either, and many of these changes will depend on how this tax is levied. If a bingo site has players from around the world, how does it levy tax for each country? Are we about to see the old format of the high street bookmaker transferred to bingo sites? It used to be that to place a £1 bet you would have to add your tax (9p) to your bet, or pay that tax on your winnings. Could we see £1 tickets costing £1.15 for UK players in the near future, as bingo players are forced to pay their tax on ticket purchases, or pay 15% on winnings? It seems unlikely that the levy will be taken from the pot as it seems unlikely that the software will be able to cope with locating a player, working out the tax and removing it from the pot before it’s paid out.

Another interesting point is bonus funds. When you sign up at a bingo site and you receive free cash, will there be a levy on that cash? Do bonus funds count as wagering in this way, and will these too be affected by the new taxation? Or in fact, will the taxation be implemented as you make a deposit? That seems unlikely, as no one will tolerate depositing £10 and only having £8 to play with, although this would be offset anyway by sites who offer reload bonuses. This seems unlikely and we’re only glad we don’t have the headache of trying to implement this new consumption levy.

If it’s levied on gross profits rather than player by player then it’s unlikely that the big bingo brands will want to shoulder this tax alone, and that means the cost will be passed onto players. This could mean smaller pot sizes, fewer promotions and smaller jackpots. Overall, this would be the best possible outcome for players, who are then unlikely to notice the tax so greatly, as it’s absorbed into the gross profits and turnover of each bingo brand, rather than paid by the customer who buys the end product.

All this is conjecture of course, until the tax actually comes into play no one really knows how it will work, or how it will be implemented, but it will have implications for the bingo sites and players alike. What we do know so far is the industry is about to be turned on its head, and while we don’t yet understand fully how these changes will affect the bingo industry, the affiliates who promote it and the customers who play, there’s no doubt that they will be affected.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Pin It on Pinterest

Share This

By continuing to use the site, you agree to the use of cookies. more information

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.