Betfred, one of the top bookmakers in the United Kingdom (UK) filed a case against the HM Revenue & Customs (HMRC) alleging that the company was overcharged on Fixed Odds Betting Terminals (FOBTs) from 2005 and 2013.
Betfred Challenges HMRC
Betfred argued that the HMRC imposed unreasonable taxes on FOBTs but refrained from imposing similar taxes on land based casinos and online casinos who offered roulette style games which were similar to FOBT games. A UK tax tribunal reviewed the petition from Betfred and found that the HMRC had not acted fairly and breached fiscal neutrality.
UK bookmakers have reportedly paid the HMRC over £8 billion in taxes on FOBT revenue from 2005 to 2013. Now that the tax tribunal has ruled in favour of Betfred, a tax rebate of over £1 billion will have to be paid back to UK bookmakers. Betfred is expected to receive a rebate of close to £100 million should the HMRC decide not to appeal the ruling or if it appeals the ruling but does not get the decision overturned.
BetFred Happy With The Decision
Betfred like other UK bookmakers was paying a 20 percent VAT on FOBTs in addition to a 15 percent betting duty which was mandatory. This was against European tax laws which Betfred rightfully pointed out. After 2013, the HMRC decided to remove the 20 percent VAT and instead impose a tax rate of 20 percent under the term of ‘machine games duty’. The tax rate on machine games duty has now gone up to 25 percent. Mark Stebbings, who is the managing director for Betfred welcomed the decision.
Controversy continues to surround FOBT machines in the UK which was labelled as a social blight by the Department for Digital, Culture, Media and Sport. Anti-gambling campaigners also pointed out that Betfred owner and billionaire Fred Done is a major Conservative party donor and it wasn’t a major surprise that Betfred ended up winning the case.
FOBTs Continue To Pose Problems In The UK
UK bookmakers have relied heavily on these FOBTs for a number of years as they are very popular with the general public and bring in a significant amount of revenue for operators. The UK Gambling Commission (UKGC) decided to impose a massive reduction in FOBT bets earlier this year after a law was passed to reduce the maximum bets from £100 to £2.
However, the ruling government came out a month later and announced that it would delay the implementation of this FOBT limitation till April 2020. The lack of immediate enforcement on FOBT terminals have upset the opposition party and anti-gambling campaigners who accuse the government of yielding to powerful gambling interests who control the FOBT industry. UK bookmakers bring in a combined £1.8 billion a year from FOBTs and the delay will allow them to continue to make a significant amount of money.
UK Government Criticized For Yielding To Bookmakers
Betfred winning the case against the HMRC has further upset anti-gambling campaigners who feel everything is currently going in favour of the bookmakers. They accuse the government of not being strong enough to stand up to the gambling lobby in the country.
In a statement, Labour MP Carolyn Harris “If this government is guilty of playing Russian roulette with the lives of problem gamblers by holding off introducing the cut in FOBT stakes, as a sweetener to protect the Treasury from the wrath of the bookies, it will be beyond belief. If the bookies have this kind of power over the chancellor then this government is in more trouble than any of us can imagine.”
A Government representative denounced those allegations and said the ruling government’s stance on FOBTs was clear. They would enforce the maximum bet allowance and ensure that the gambling industry in the country is safe and does not cause harm to minors and vulnerable gamblers. However, the government also needed to take into consideration that numerous stakeholders were involved and that the implementation would have to be carried out at the right time for it to be a smooth transition for all parties concerned.
Stats from the UKGC show that based on 2016 data, more than 14 percent of FOBT players were problem gamblers which was higher than any other mode of gambling in the UK.