UK Bookmakers Fear Tax Rise As Part Of New Budget
Taxes - perhaps the most profane 5 letter word in the English language. At least some vulgar language can be shouted out during sex and have some satisfactory meaning. Nobody hollers out "TAXES" while making love, unless you or your partner happens to be a tax consultant or employee of the IRS.
The word takes on new meaning this week as British bookmakers are faced with the prospect of Chancellor Alistair Darling's pre-budget report including a tax hike.
Darling may target gambling machines, which have propped up bookmakers' profits in recent years but are the subject of an investigation by the Gambling Commission watchdog, because of concerns over their potentially addictive nature.
"The budget has contained many surprises in the past, and it is generally agreed that gambling profits are easy targets in the current environment. We believe that an increase in machine taxes is most probable and, indeed, likely," said Anna Barnfather, an analyst at Jeffries International.
"The Treasury needs the money, machine income has been the bright spot for the UK operators, and there have been suggestions that the addictive nature of the machines should be addressed further," said Blue Oar Securities analyst Derren Nathan.
The government can justify the tax hike by suggesting that fixed odds terminals help to fuel gambling addictions.
In Ireland, where machines are not permitted in betting shops, the government last month doubled duty on all betting to 2 percent with effect from Jan. 1. Ireland's biggest bookmaker Paddy Power, said it expected the move to reduce its operating profit by 9-10 million euros ($11.3-$12.5 million) next year.
Ladbrokes, which is Britain's biggest bookmaker and has over 8,000 gambling machines in its 2,600 shops, said in its most recent trading update that gross win from its machines had increased by 14 percent in the four months to end Oct. Gross win from each machine now averages 677 pounds ($1,005) a week.
----
Jagajeet Chiba, Gambling911.com
