Free Betting No Longer Tax-Free?

British remote betting is about to face new regulatory changes and taxation approach since next year. That was revealed in the speech given on March 16th, by the Chancellor of the Exchequer, George Osborne. The Chancellor announced that all UK licensed operators will have to pay taxes on their free bet offers. The new change is to become effective from August 2017. The good news is that UK operators are granted with a year and a half to consider how to proceed with their free offerings.

In the past few years, a number of changes were introduced in regards with the online gambling taxes. With the last changes that were brought after the admission of 2014 UK Gambling Commission Law, the UK Government proposed a 15% taxation of the profits of the remote gambling operators. The regime was based on a ‘point of consumption’ approach. Since the admission of the new UK Gambling law, 15% of the profits of the gambling companies has been withheld and went to the exchequer.

The Law had previously excluded the free bets from taxation. Those free offerings are normally offered in the form of free spins and bonus credits to enhance the players’ satisfaction and attract new players. By that time many gambling companies complained that free bets shouldn’t be taxed, especially considering the fact that they don’t bring any profits for the users. At that time, the UK Government agreed to exclude the free bets and followed the ‘Point of Consumption’ rule. Now, when the Government plans to start collecting taxes from free bets, the gambling operators have 17 months to come up with a new strategy and plan their offerings ahead and alternate their bonus strategy.

Once the new changes come into effect, all free casino and bingo odds will be taxed at 15%. At present, all free sports and horse racing bets (both online and offline) are subject to 15% taxes General Duty Tax. As per the supporting documents, bingo and casino players benefit from the tax concessions, unlike the customers in football and horse racing.

A Ladbrokes spokesman commented that while the gambling companies had been expecting changes in the tax rates, the taxation on free bets came a bit surprising. Well, you may be wondering how will affect the bonus funds you receive on sign up? We do believe that online gambling operators will find custom solutions tailored specifically to their players’ needs and this new changes won’t reflect negatively on bingo players. However, as Benjamin Franklin said – ‘In this world nothing can be said to be certain, except death and taxes’.