UK Online Boom Offsets Land-Based Tax Shortfall

November 2, 2021
Increased betting and online gaming activity has driven positive growth in year-to-date UK gambling tax receipts, despite cratering returns from machine gaming.


Increased betting and online gaming activity has driven positive growth in year-to-date UK gambling tax receipts, despite cratering returns from machine gaming.

According to HM Revenue & Customs' latest bi-annual “UK Betting and Gaming Statistics” report, betting and gaming duty receipts, including lottery duty, totalled £2.18bn in the first nine months of 2021, versus £2.04bn a year earlier and £2.17bn in the equivalent period of 2019.

The overall tax take, which dipped by 7.1 percent to £2.81bn in calendar 2020, has remained broadly steady over the last 18 months despite the devastating impact of COVID-19 on land-based operations.

Remote gaming duty (RGD) receipts increased by 16.8 percent year-on-year to £727.3m in the first nine months of 2021, accounting for 33.4 percent of total gambling duties, versus an equivalent ratio of 17.8 percent in the year to March 2019.

The importance of remote gaming within the overall duty mix has intensified since the rate it is taxed at was raised from 15 to 21 percent in April 2019, in parallel with a landmark cut in maximum fixed-odds betting terminal (FOBT) stakes to £2.

UK RGD & MGD Receipts

RGD, which does not include taxes paid on remote betting activity, offset the resulting shortfall in machine games duty (MGD) and has subsequently continued to fill the gap during enforced land-based shutdowns over the course of the coronavirus pandemic.

All UK land-based betting and gaming venues were forced to shut in mid-March until early July 2020, with second and third national lockdowns mandated in November 2020 and January 2021 before a reopening in mid-May.

Consequently, receipts from MGD — which is applied at a sliding rate of 5 to 25 percent and taxes gaming machines in casinos, arcades and bingo halls as well as betting shops — sank by 37 percent to £357.2m in 2020 and a further 43 percent to £154.9m in the first nine months of 2021.

Against this backdrop, VIXIO GamblingCompliance estimates that UK online net gaming revenue grew by 15 percent year-on-year to £6.4bn in 2020 and an accelerated 28 percent to £7.4bn in the year to June 2021, boosted by substitution of gambling activity to the remote channel and a uniquely congested sporting calendar.

The year-to-date uptick in total duty receipts has been supported further by a 12.2 percent year-on-year increase in lottery duty to £776.3m and 21.2 percent growth in general betting duty, applied to both online and retail operations, to £489.6m.

Despite a shutdown on retail bookmakers persisting for more than five months of the year, general betting duty receipts are on track to surpass the £595.8m registered in 2019 amid accelerated online growth supercharged by retail-to-online channel shift.

UK-licensed operators are required to make duty payments within 30 days of the end of their quarterly accounting periods, leading to a lag in the impact of lockdown periods on quarterly tax receipts.

The UK’s 2021 Autumn Budget, unveiled last week, introduced a 50 percent business rates discount for the retail, leisure and hospitality sector, including land-based gambling operators, until April 2023.

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