HM Treasury – Written evidence (GAM0080)

 

  1. HM Treasury welcomes the opportunity to submit written evidence to the Committee on the Social and Economic Impact of the Gambling Industry.

 

  1. The Committee submitted the following questions relating to the amount of revenue raised from the gambling industry:

How much revenue does the Treasury derive each year from taxes on the gambling industry and from other taxes associated with gambling?

  1. The total revenue raised from gambling duties in 2018/19 was around £3.0bn*. This represented c.0.4% of the total annual tax take. This is forecast to rise to £3.2bn by 2019/20.
  2. It might be helpful to explain that the gambling tax regime is made up of seven different duties. Apart from Lottery Duty, gambling duties are generally levied on gambling operators’ gross profits – i.e. the value of stakes received minus prizes paid out. For gambling from which the operator’s profit is in the form of a commission or fee (e.g. poker and other peer-to-peer gambling, betting exchanges, pool betting) the effect of the legislation is to tax the commission or fee. The seven gambling duties and rates are set out in more detail in the table at annex A.
  3. Almost all gambling activities are exempt from value added tax (VAT), the exception being gaming machines that offer non-cash prizes. However, gambling operators are liable to VAT on their non-gambling activities such as advertising, food and alcohol sales. A separate breakdown for VAT is not available.

How much revenue does the Treasury estimate it will lose as a result of the reduction in the maximum stake for Fixed Odds Betting Terminals from £100 to £2?

  1. As a result of the reduction of the maximum stake for Fixed Odds Betting Terminals from £100 to £2 in April 2019, the Office of Budget Responsibility estimated in its Economic and Fiscal Outlook report in March 2018[1] that revenue would reduce by around £300m per year over the forecast period. To offset this, the Government increased Remote Gaming duty to 21% from April 2019.


Annex A

Duty

Who pays?

Rate

2018-19 Revenue (£m) *

General Betting Duty

Bookmakers

15% of gross profit (general bets);

10% of gross profit (sports spread betting);

3% of gross profit (financial spread betting)

619

Pool Betting Duty

Bookmakers

15% of gross profit (e.g. commission)

6

Lottery Duty

National Lottery operator

12% of ticket value (i.e. ‘stakes’)

853

Gaming Duty

Casinos (gaming tables)

15-50% of gross gaming yield (banded by marginal profit)

222

 

Remote Gaming Duty

Remote (online) casinos, slots and bingo sites

21% of gross profit

531

Machine Games Duty

Gaming machine operators

(bookies, casinos, arcades, bingo halls)

5% of gross profit (lower rate); 

20% of gross profit (standard rate);

25% of gross profit (higher rate)

720

Bingo Duty

Bingo halls

10% of gross profit

33

 

*Figures are Provisional

 

9 September 2019

[1] Box 4.2 OBR Economic and fiscal outlook - March 2018