FOBT stake cut set for next October as Hammond increases remote gaming duty

Chancellor Philip Hammond hit the online gambling sector with a tax hike in Monday's Budget which will come into force in October 2019 alongside the implementation of the cut in the maximum FOBT stake to £2 from £100.

Hammond has increased remote gaming duty (RGD), the tax paid by online gambling operators on games of chance such as roulette and slots, to 21 per cent from 15 per cent in order to make up for the shortfall in revenues expected to stem from the cut in FOBT stakes that was announced in May.

General betting duty, which covers betting on racing and sports, will remain at 15 per cent.

Hammond said: "From October next year I can confirm we will increase remote gaming duty on online games of chance to 21 per cent in order to fund the loss of revenue as we reduce FOBT stakes to £2."

The timing of the cut in FOBT stakes will anger campaigners who have pressed the government to implement the change in April.

However, the Association of British Bookmakers said the implementation period could help save some jobs in the betting shop sector.

Reacting to the Budget statement, the ABB said: "Thousands of jobs will be lost and shops closed on the high street as a result of the announced reduction in maximum stake.

"The implementation period will not avert most of the job losses but it will give a small amount of time for businesses to redeploy staff and save jobs where possible – thus protecting people’s livelihoods.

"The betting shops that survive this seismic change will continue to provide a safe place to gamble with staff interaction and industry-leading responsible gambling measures."

Government projections estimate that in its first full fiscal year in 2020-21 the increase in remote gaming duty (RGD) will raise an extra £255 million for the Treasury, while the cut in FOBT stakes will mean £245m less for the government's coffers.

There had been some speculation that RGD could have been increased to 25 per cent, which was taken as a small positive by representatives of the sector.

Remote Gambling Association chief executive Clive Hawkswood said: "An increase from 15 per cent to 21 per cent for RGD is a steep hike in tax that will cost the sector upwards of another £250m per year.

"It will be a bitter pill to swallow for many, but it could have been markedly worse at 25 per cent, which was being mooted earlier today. There is also some small comfort that implementation will be six months later than we had prepared for."

Goodbody Stockbrokers analyst Gavin Kelleher also thought the announcement could have been worse for the gambling sector.

He said: "All in all, we believe that, while today’s Budget has seen increased costs for UK gambling stocks, the final outcome is not as bad as recent expectations."

However, campaigners who called for FOBT stakes to be cut to £2 from April were unhappy with the news.

The Bishop of St Albans, Alan Smith, tweeted he was "shocked" by the delay in implementation, although he welcomed the rise in remote gaming duty.

Scottish National Party MP Ronnie Cowan said: "It is deeply disappointing that a small faction on the Tory backbenches have been able to both influence and delay the decision of when to implement the £2 maximum unit stake on FOBTs.

"This shows a Tory-negotiated settlement that disregards the cross-party support on the issue of addressing gambling-related harm.

"Delaying the implementation does little to support those individuals and families whose lives have been devastated by the addictive nature of these games."

COMMENT

It could have been worse for a beleaguered industry

Monday's Budget was not the pre-Halloween shockfest it could have been for the gambling industry, although campaigners against FOBTs professed their horror at the chancellor's announcement.

The sector had been bracing itself for a tax increase in order to make up for the loss of revenues from FOBTs, it was just a question of when and how much.

High-street betting shop firms and online operators would have preferred the changes to have come in April 2020 but instead they will have until October next year before they come into force.

There had also been speculation that the increase in remote gaming duty could have taken the rate to 25 per cent from 15 per cent.

It is an illustration of how beleaguered the industry is that chancellor Philip Hammond's decision to raise RGD to 21 per cent was greeted with some relief.

Opponents of FOBTs inside and outside Westminster had called for the changes to the maximum stake to be implemented in April.

There had been stories in the run-up to Monday's announcement that if Hammond ignored them they might seek an amendment to the Budget.

So the story might not be over yet.
Bill Barber

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