The government of the United Kingdom has just announced the new 2018 budget plan for the upcoming year. In this new paper, online gambling is mentioned among many other issues.
The remote casino industry was slightly surprised to see the Remote Gaming Duty rise to 21%.
This will take effect in October 2019, so the casino operators have got some time to prepare for the changes. As of now, the Remote Gaming Duty is only 15%, so it’ll increase by 6% next year.
This will bring in £295 million to the Treasury by 2024, according to the Office of Budget Responsibility.
Mobile Gambling to Get More Expensive
Naturally, this means that the profits of all online and mobile casinos operating in the UK will decrease. This can lead to many changes in the landscape of remote gambling in the country:
- Pay by Phone casinos may become less lucrative
- Some casinos may stop operating in the UK altogether
- Smaller mobile casino bonuses or worse terms are a real possibility
Mobile Casinos to Leave the UK
The worst that can happen is that some British-based or foreign casinos operating in the UK may stop their activity there. As the taxes increase, it will become less profitable to run these businesses. For some, the payoff may not be high enough to keep it up anymore.
What’s more, as the atmosphere is getting grimmer in the UK, it’s the opposite elsewhere. For example, sports betting has just been legalized in the US. It’s a new legal market that might just be better to be in for the casinos because:
- It’s new, meaning there’s a demand for new gambling sites
- It doesn’t have that many regulations yet, especially when compared to the UK
This has forced many UK betting companies to branch out overseas. As a result, we might expect even more examples of this shift towards the foreign markets. Many online gambling operators might simply leave the UK market in search of ‘greener pastures.’
Pay by Phone Casinos Will Suffer
Some highly successful casinos may continue their current marketing strategies despite the news. However, many pay by phone sites aren’t huge and won’t be able to ignore the new RGD.
Although pay by phone casinos are among the most popular UK gambling destinations online, their clients are casual players. They gamble there because mobile casinos offer the lowest stakes, no fees and the most lucrative bonuses too.
So, many of these sites will have to change their terms to get positive revenue. This will possibly manifest in worse terms for casino bonuses or fees.
In any case, pay by phone punters will feel things change. They might even feel it more than the high stake players at various VIP casino sites. In effect, mobile gambling will become more expensive in the long run.
Why Will The Tax Increase?
There’s a reason why Chancellor Philip Hammond is raising the tax for online and mobile casinos. However, it isn’t directly related to these remote businesses.
Instead, this is done to balance the costs that the government will experience by limiting the betting on the Fixed Odds Betting Terminals (FOTBs) will have their max stakes reduced from £100 to £2 at the same time next year.
Problem Gambling Issue
The FOTBs were determined to be among the most dangerous gambling machines for punters at risk.
With maximum bets of £100, it’s possible to lose your monthly wage in less than a minute.
As a result, the Gambling Commission and other authorities have decided to minimise the risk. Of course, online casinos may think it’s unfair that they should pay for the failures of their land-based counterparts. However, when the safety of casual players is involved, the casino operators have no choice.
RGD Rate Higher Than Expected
In fact, the companies working in the industry and the experts of finance were expecting this. However, they didn’t think the tax growth would be so prominent.
The expected rate was 20%. So, even a single extra per cent might make a huge difference for some companies.
Then again, we can’t blame the government for this. Due to the FOTB policy change alone, the Treasury will lose £270 million by 2023/24. So, these changes are made first and foremost for the benefit of the people.
The question is: will the people really benefit from it as gambling, in general, becomes more expensive?