The UK gambling industry has received another heavy taxation blow after the Government confirmed on Friday that a new levy on horse betting will be imposed from April 2017. All bookmakers, including offshore ones, that provide betting services to UK customers will be required to pay 10% on gross profits from racing bets per year. The money will be used to support the sport.
News about the potential implementation of the 10% levy first spread in October 2016. The measure immediately faced great opposition from UK-facing gambling operators as it would come as another hit to their profits. Gambling lobbyists have called for the headline tax rate to be reduced by one or even two percentage points.
British Sports Minister Tracey Crouch said on Friday that they expect horse racing to receive around £90 million every year in the first seven years after the tax was implemented. What is more, it is believed that the new measure will put an end to a long-standing dispute between the sport and bookmakers over the share of racing bets profits the latter should return.
The UK Gambling Commission will be charged with collecting the new tax from bookmakers. A newly formed Racing Authority will then have the responsibility to distribute the money in a manner that will support British horse racing most effectively. The Horserace Betting Levy Board, or the body that has been accepting and distributing payments from operators over the years, will be dismissed early next year.
The new tax rate comes as a much-needed update of a regime that dated back to the early 1960s or decades before Internet gambling came into existence. After the UK regulated its online gambling market, leading bookmakers moved their offices offshore to avoid heavier taxation. This resulted in taxes on racing bets being reduced significantly over the years. According to official data, contributions to horse racing decreased from £99.3 million in 2005-2006 to £54.5 million a decade later.
In order to uplift financial support for the sport, the British Horseracing Authority has created a special initiative, inviting bookmakers to commit to voluntary contributions in exchange for increased brand visibility across racecourses. Almost 20 betting operators have joined the program so far.
The confirmation about the new betting tax comes at a tough time for the UK gambling industry. The Government announced late last year that its triennial review of the local market would be focused on the highly controversial fixed-odds betting terminals and it is believed that new regulations on how these are operated will be introduced this year. The machines account for a significant portion of the gross gambling yield generated annually, and this is why any limitations put on them are feared by operators.
