January 17, 2017 / by: Gray Peterson
Another heavy taxation blow is expected to unleash on the UK gambling industry after the government released a statement on Friday, confirming that horse racing bets will be liable for an increased tax levy that is expected to take action from April 2017. All operators and bookmakers (both local and offshore ones) who provide horse racing bets to UK customers will have to pay 10% on gross profit from racing bets. The money generated will be used to improve and support the sport all over the UK.
News regarding the possible implementation of the 10% levy started being speculated in October 2016. The measure faced immediate backlash and widespread opposition from operators offering their services in the UK who maintained that the action would bring another significant hit to their profits. Gambling experts and lobbyists have tried to call for the proposed tax to be lowered by one or two percentage(s) but it seems the government has other plans.
Speaking to the media on Friday, the British Sports Minister, Tracey Crouch, stated that horse racing is expected to generate around £90 million every year for the first seven years after the tax measure is fully implemented. Additionally, it is believed that the implementation of the tax bill will bring to a halt the prevalent dispute between bookmakers and the sport, regarding the share of racing bets profits.
For full implementation, the UK Gambling Commission will be charged with the role of collecting the newly imposed taxes from bookmakers. The money raised through taxes will then be handed over to the newly formed Racing Authority which will be now charged with the responsibility of distributing the cash in a manner that will steer British horse racing to excellence. The previous body (Horserace Betting Levy Board) that was given the responsibility spreading the racing bets payment over the years will be discharged early next year.
The newly introduced tax rates come as a rescue to the outdated UK tax regime that dates back to decades before the advent of internet gambling. The tax system concentrated so much on taxing local bookmakers. So, when the UK legalized and licensed online gambling, renowned local bookmakers shifted their offices to other countries to avoid the prominent local taxation. The move led to a significant drop in revenue from racing bets over the years. Data from the Gambling Commission indicate that horse racing revenue decreased from £99.3 million in 2005/2006 to the current figure that is estimated to be £54.5 million.
In the quest to increase financial support for the sport, there is a new initiative from the British Horseracing Authority, which invites interested bookmakers to pledge and make voluntary contributions, and in exchange get increased brand visibility in all racecourses. The program is estimated to have already attracted 20 betting operators.