Betfred secures FOBT tax victory
Betfred has secured a legal victory over HM Revenue & Customs in the UK that could lead to bookmakers in the country benefiting from a £1bn (€1.1bn/$1.3bn) tax rebate.
A tribunal ruled that the collection of VAT on fixed-odds betting terminals (FOBTs) from 2005 to 2013 “breached the principle of fiscal neutrality”, because similar games online and in casinos were exempt from the tax. The £1bn figure was based on the rate of VAT paid on combined income from FOBTs over the period.
According to reports, Betfred is likely to reclaim approximately £100m as part of the rebate, which will affect several bookmakers.
HMRC did not say whether it would launch an appeal but added that it would give the judgement “careful consideration”.
It was announced in May that the government would accept Gambling Commission recommendations for a new £2 stake limit for FOBTs, down from the current £100. Bookmakers claimed the decision would lead to 4,000 shop closures and 21,000 job losses.
Some bookmakers – like Betfred – would appear to be more vulnerable to the changes than others. Some 83% of Betfred’s earnings was generated by its retail shops, where FOBTs are situated, according to analysts.
However, lobbyists and politicians have criticised a delay in the reform of FOBT rules, with the new regulations unlikely to be implemented until 2019 due to the need for parliamentary approval for the introduction of a new statutory instrument.
Despite reports that the changes would take bookmakers a maximum of eight weeks to introduce, a later transition date has reportedly been agreed by the UK’s Treasury.
Earlier this month, council chiefs claimed that an extra £3.6bn could be wagered on FOBTs over the next two years if there is a delay in the implementation of a maximum stake reduction.
Last month, Betfred reported an annual operating loss of £13.4m despite a 17% increase in turnover to £12.7bn.
Picture credit: Andrewx