Betting and gaming taxes are often calculated as a percentage of either the operator’s net profit or the total stakes across all forms of gambling.
Experts anticipate that gambling and gaming taxes can bring in £3.30 billion yearly. That works to £17 a person or $18 a family, or 0.3% of total revenue, or 0.1% national income.
The aggregate of numerous such levies constitutes the real gambling and gaming duty receipts are as follows:
- Lottery duty: The fee for purchasing a ticket or playing the UK National Lottery. Besides the National Lottery, all lotteries are free from this requirement. It’s due to sales of Euromillions in the UK and scratch cards. In 2017–18, lottery duty generated over £831 million, 29.1% of the total cash revenue.
- Machine games duty (MGD): The fee associated with playing video games that provide cash rewards. These include fixed-odds betting terminals, fruit machines, quiz machines, and slot machines.
The amount of tax paid varies on how much it costs to engage in a sport and how large the possible reward can be. Machine games that exclusively provide non-monetary bonuses or in which the cost of entry is higher than any cash award are not eligible for MGD.
It debuted in 2013 and took the place of the amusement device license duty (AMLD). In 2017–18, MGD raised over £712 million, or 24.9% of the total cash amount.
- Generic betting duty (GBD): The tax levied on bookmakers’ revenues from “general bets,” which excludes on-course wagering and includes wagers on sports, horse or dog racing, and spread betting. Depending on the wager’s nature and location, you must pay a fee. This generated £572 million in 2017–18
- Remote Gaming Duty (RGD): The charges on gaming provider earnings from remote gambling. This includes any payments from “free plays” the supplier may supply. Free games, welcome bonuses, and matching deposits qualify as “free plays,” as do other incentives to wager at no cost or with lower stakes.
The duty is a set percentage of the provider’s earnings. In 2017–18, RGD raised £443 million, or 15.5% of the total cash amount.
- Gaming duty is a tax levied on the gross gaming winnings of casinos located in the UK. Because of the banded structure of the levy, successful casinos must pay a correspondingly greater rate. In 2017–18, it raised £265 million, or 9.3% of the cash amount.
- Bingo duty: The fee is assessed at a certain percentage of the bingo promoter’s total revenues. Except for small-scale bingo, domestic bingo, non-profit bingo, and bingo played on machines protected by MGD; all bingo games played in the UK are subject to the fee. In 2017–18, bingo duty generated £32 million, or 1.1% of the total amount collected in cash.
- Pool betting duty (PBD): The tax assessed on the earnings of bookmakers for wagers in which the winners get a portion of a staked sum of money. PBD received a set salary and raised £5 million in 2017–18, or 0.2% of the total cash.
Those responsibilities should not apply to “on-course betting,” in which clients place their wagers while physically present at the racecourse. A tax called the horserace betting levy (HBL) is instead levied on the total gross winnings from bets placed on British horse races is a UK government agency responsible for collecting the levy. In 2017–18, the levy brought in £108 million.
Recent Trends And Latest Forecast
Changes in cash revenues are easier to assess over extended periods with some context, such as asking what percentage of national income is subject to taxation.
Revenue trends as a percentage of GDP are instructive because they show how closely receipts track the taxed economic output. Because of inflation and increased economic activity, real income and GDP shoot over time.
When assessing the long-term viability of public finances, the ratio of receipts to GDP is the most important indicator. Changes in this ratio may be broken down into two categories:
- how much gambling costs as a percentage of national income (the “tax base”),
- how much of a percentage of national income is taxed.
Betting and gaming revenue nearly doubled from 2010-11 to 2017-18, faster than the economy’s growth. The increased MGD rates and the advent of RGD are two examples of policy measures contributing to this expansion. The section on policy measures provides further context. Our prediction calls for betting and gaming revenues to remain stable as a percentage of GDP.
The OBR requests gambling and gaming duty collections projections from HM Revenue & Customs. The projections begin with an estimate of current-year revenues and then utilize models to project a future increase in receipts.
As part of a challenging procedure, HMRC analysts submit their projections to the BRC and OBR employees throughout two sessions. Before releasing Economic and fiscal outlooks, the BRC goes through this procedure to fine-tune the assumptions and assessments that support the projections.
Multiple econometric simulations for each duty estimate future betting and gambling duty revenues. In general, the projections for global nominal consumption and GDP growth serve as the inputs to these econometric models.
Main Forecast Determinants
The prediction is driven mainly by economic factors associated with the revenue bases for each obligation. These factors are often very hard to forecast. See the short reckoners section below for further details on how these factors affect gambling and gaming duty collections:
- Average consumer expenditure
- Economic expansion
- Family’s available income
- Primary forecast assessments
Betting and gaming duty projections have been significantly impacted by policy initiatives revealed by the Conservative and Coalition governments since the first projections were made in June 2010.
The Treasury’s initial policy costings are stored in the policy initiatives database and are briefly outlined in that paper. The assigned uncertainty rating for measures introduced since December 2014 is documented in a database server.