Online Bingo and the 2012 UK Budget

Last Tuesday Chancellor Osborne revealed the new UK budget and the bingo industry has good reason to be concerned. One change that will hit land based operators hard is the Machine Games Duty (MGD) which will reduce profits greatly. Currently bingo hall operators report that as much as 70% of all revenues are generated by slots and fruit machines. Pub owners have also voiced their objections to the higher taxes. The bingo industry is already taxed at a higher rate than any other form of gambling and the new Machine Duty will offset and gains made from double tax relief. Although the taxes for bingo halls were decreased bingo hall operators will actually pay more because of the machine duty. A spokesman for the Bingo Associated stated “This new duty will help ensure that bingo’s potential for growth is substantially reduced, with some smaller independent operators seeing potential growth translated to contraction.”

Even worse, last year bingo halls faced much higher rates for licenses. In some cities the town councils raised the rates from hundreds of pounds annually to thousands. The new machine duty will levy a tax of 20% on the primo source of revenue for bingo clubs. Starting in February 2013 the new tax goes into effect. The effect of the new tax could be disastrous for smaller bingo halls that may be forced to close putting many out of work. Some in the industry consider the new taxes as another assault by the tory government on anything enjoyed by the working classes in the UK.

There are also big changes in store for the online bingo industry. Unlike land based halls online bingo operators have been given more time to prepare for the changes. The new taxes on internet bingo operators will not go into effect until December 2014. The policy shift will affect all online bingo operators and the new 15% taxes will be levied at the point of consumption. This will affect all online bingo sites that target British players. Many operators moved offshore to take advantage of favorable tax rates.

Online bingo operators licensed in the UK favor the new tax saying it will level the playing field. Currently offshore sites have a big advantage because of low tax rates. The new taxes will also help problem gamblers and will provide more funding for gambling addiction treatment programs. Although it is too soon to see just what effect the new policies will have on the industry bingo operators expect big changes.

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