Budget bumps up machine tax for bookies

In an unexpected blow for the bookmaking sector, Chancellor George Osborne has announced that the Machine Games Duty tax rate for B2 gaming machines is to increase to 25% from 20%.

In the budget statement, Osbourne said: “The Department of Culture, Media and Sport has a review underway to consider the regulation of Category B2 gaming machines (also known as fixed-odds betting terminals), which will report before Easter. These machines are one of the most profitable forms of high street gambling. Alongside the review, the government will create a new higher rate of machine games duty at 25% for B2 machines to bring their profitability more into line with other gaming machines on the high street.”

MGD was only introduced last year at a 20% rate, which saw most bookmakers paying more than the previous AMLD regime, despite a promise from the Treasury that it would take a ‘fiscally neutral’ approach. The fact that the rate has now been increased by a quarter shows that the Treasury has little interest in safeguarding jobs in the betting sector, just squeezing the pips.

Global Betting and Gaming Consultants’ director Lorien Pilling commented: “After a bumper time at the Cheltenham Festival last week, the bookmakers have been brought back down to earth with a bit of a bashing by the Chancellor in the Budget today. Bookmakers with retail estates will face higher costs with the new 25% MGD on FOBTs and those with offshore sports books will be paying additional levies on their UK horseracing gross profits.

“The decision to extend racing levy to offshore bookmakers was not too surprising nor was the mention of the notion of a “racing right” to support horseracing. A racing right was one of the options outlined more than a year ago in a consultation on the future of the Levy. Various governments have sought to reform or abolish the Levy but it still remains stubbornly in existence in 2014.”

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