Operators have pointed to recent examples in Holland, Germany and Romania which illustrate that, far from increasing government revenue, increasing the levy on GGR often just drives legal gambling into the ground. A rise in MGD doesn’t look like such a great idea – just ask the Europeans?
Industry voices have continued to sound the alarm over a potential hike in gambling tax, and are pointing across the channel for examples of how similar government cash-grabs have failed to yield their intended results.
The government is said to be considering a radical proposal by the Institute of Public Policy Research (IPPR) to exponentially increase both Remote and Machine Game Duty to 50 per cent, alongside a more modest bump (to 25 per cent) to General Betting Duty, a move which recently garnered the support of former PM Gordon Brown: who said it was a “straight forward Budgetary choice.”
But if Europe’s example is anything to go by, nothing could be further than the truth.
Just last year, the new coalition government in the Netherlands opted to implement a 7 per cent increase in its tax on GGR (to 37.8 per cent), a move which quickly saw annual online revenue plummet by a 25 per cent, resulting in its net tax income actually decreasing: as high-rolling clients opted for cheaper (black-market) off-shore alternatives.
Meanwhile, a strikingly similar situation exists in Germany, where under the bizarre terms of its 2021 Interstate Treaty on Gambling, players are forced to cough up over 5 per cent turnover tax on stakes.
Small surprise then, that German betting revenue dropped 13 per cent from 2021 to 2022, with regulator the GGL estimating a market share surge to 50 per cent for illicit offshore providers.
“The lesson from both of these examples is clear,” Gambling Business Group Chairman Steve Sharp recently remarked. “When governments overshoot on rates or narrow product value, legal channels contract and untaxed and unprotected channels expand…which is the opposite of public-policy aims.”
Taxes up, tax returns down
Steve Sharp said……. “When governments overshoot on rates or narrow product value, legal channels contract and untaxed and unprotected channels expand…which is the opposite of public-policy aims……
