UK gambling operator Ladbrokes Plc urged the UK Government to rethink its plans to increase tax levied on profits generated from fixed odds betting terminals (FOBT’s). The operator claimed that unfair tax levying on the UK bookmakers could cost the industry around £75 million a year.
The tax rate issued on FOBT’s is set to rise from 20% to 25% in 2015. Bookmakers will also see the implementation of tax levied on their online gaming and sports betting channels, set at 15% on profits gained from the igaming verticals.
UK betting and gambling operators were prepared to hear the implementation of new taxes on their industry, however the rise in FOBT’s tax announced by Chancellor of Exchequer George Osborne took them by surprise.
FOBT’s account for a large part of the industry’s revenues and will have a negative impact on retail bookmaker margins.
Ladbrokes Corporate Affairs Director Ciaran O’Brien commented on behalf of the operator “We will be pressing for an urgent review of a tax that seems to be based on the commercial success of a product not on any strategy or basic taxation principles of equity between competing sectors,”
Business reports suggest that the Tax on FOBT’s may cost Ladbrokes £20 million in profit generation. The operator struggled in 2013, announcing no less than four profit warnings to shareholders. 2013 saw full year profit down 33%
Ladbrokes shares fell a further 4.5% on Thursday after the announcement of the new purposed taxes on gaming and betting operators.