After a bumper time at the Cheltenham Festival last week, the bookmakers have been brought back down to earth with a bit of a bashing by the Chancellor in the Budget today.

The Daily Mail’s long-running but mathematically challenged campaign against fixed odds betting terminals (FOBTs/B2) has borne fruit. The rate of duty will be increased on FOBTs to 25% from 20%. This will be done by creating a new higher rate of machine games duty (MGD). The DCMS will also report on the regulation of B2 machines before Easter. 

In 2013 William Hill made GB£ 440 million in gross win from machines in its shops. At 20% MGD, it would have paid GB£ 88 million in duty. Had the rate been 25%, William Hill would have paid GB£ 110 million on the same gross win, GB£ 22 million more in costs.
(Note: MGD has not actually been force for a full calendar year yet (introduced 1 February 2013))
In the wake of the announcement William Hill’s shares have fallen 6% on Wednesday; Ladbrokes by 13% ( as at 2pm). 
Global Betting and Gaming Consultants’ director Lorien Pilling commented:
“After a bumper time at the Cheltenham Festival last week, the bookmakers have been brought back down to earth with a bit of a bashing by the Chancellor in the Budget today. Bookmakers with retail estates will face higher costs with the new 25% MGD on FOBTs and those with offshore sports books will be paying additional levies on their UK horseracing gross profits.” 

“The decision to extend racing levy to offshore bookmakers was not too surprising nor was the mention of the notion of a “racing right” to support horseracing. A racing right was one of the options outlined more than a year ago in a consultation on the future of the Levy. Various governments have sought to reform or abolish the Levy but it still remains stubbornly in existence in 2014.” 
The bingo sector must be considered a great winner. The Chancellor announced a halving of the rate of bingo duty from 20% to 10%. Given that the sector was lobbying for a reduction to just 15%, the announcement that it would actually fall to 10% must been seen as a great victory for UK bingo. Bingo operators now have to show what they can do to revive bingo’s fortunes with the new low tax regime. 

The Chancellor’s statement on gambling duties:
“Turning to gambling duties.
Fixed odds betting terminals have proliferated since gambling laws were liberalised almost a decade ago.
These machines are highly lucrative, and therefore it’s right we now raise the duty on them to 25%.
We will also extend the horserace betting levy to bookmakers who are based offshore.
And we’ll look at wider levy reform and at introducing a ‘racing right’ to support the sport.
While betting machines have grown, the number of bingo halls has plummetted by three quarters over the last thirty years. Yet bingo duty has been set at the high rate of 20%.
…my Honourable Friend for Harlow has turned his energy and talent into a vigorous campaign to cut bingo duty – ably assisted by my Honourable Friend for Waveney.
They want the rate cut to 15%. I can go further. Bingo duty will be halved to 10% to protect jobs and protect communities.”