What to expect after Betfred’s FOBT tax win

31 Jul 2018

BetfredWell-known British bookmaker Betfred's recent victory regarding the VAT on revenue from Fixed-Odds Betting Terminals (FOBTs) at land-based betting stores could set new limits on online gaming as well. The tribunal that took place some days ago found Betfred innocent against the claim that FOBTs in land-based and online casinos were not subject to the same tax as brick and mortar betting shops. In the same tribunal it was also found that the same logic applied to all other FOBTs including roulette, card games and virtual racing games.

The VAT was applied by HMRC on revenue deriving from FOBT starting from 2005 up to 2013. Following that the British government applied the 20% Machine Games Duty, which was then increased all the way up to 25% in 2014. The consequences mean that Betfred is expected to receive a £100m VAT refund, but that's not the end of it. If Betfred were to be refunded then the ruling would also have to be applied to its competitors, which would then bring the amount the government would have to pay out all the way up to £1.9b.

In an effort to make up for all the expected financial losses due to this incident, the government is anticipated to increase taxes on other gaming products. For example, last June the remote gaming duty went from 15% to 20% as part of the plan to balance the reduction the maximum stakes in FOBTs from £100 to £2. The reduction will probably take a few more years to be in effect (probably around 2020) as well as the subsequent appeal of the VAT by HMRC.

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Betfred is a well-known name among bettors in Britain. It is the epitome of uncomplicated betting, and one of the last UK betting giants still privately owned. The sportsbook was the first to offer a Lucky 15 bet and the first to pay out bettors before a result was guaranteed in 1998. The horse and greyhound racing sections are some of the most complete among online bookies. If you asked me who the best High Street bookmaker is, I would easily tell you, Betfred. However, the transition from shops to online betting has not been so smooth. You can see that most of their business still comes from the High Street, as the platform lacks finesse. The number of markets and payment methods available does not even come close to what the competitors are offering. In addition, for a sportsbook that has been online since 2004 and had a revenue of £10 billion in 2019, the expansion internationally has inexplicably been overlooked. Nonetheless, it is still one of the top options for all the major UK sports.

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