Led by HM Revenue & Customs (HMRC), the new ‘Tax Treatment of Remote Gambling’ initiative aims to simplify the process by restructuring how taxes are apportioned to online gambling operations licensed in the UK.

What Would Change Under the New UK Gambling Tax Structure

The current HMRC structure facilitates three separate duties: Remote Gaming Duties at 21% of gross profits, General Betting Duties ranging from 3% to 15%, and Pool Betting Duties at 15%.

However, the latest government consultation seeks to consolidate these taxes into a single Remote Betting and Gaming Duty (RBGD), which will be applied based on the consumption principle of taxes being levied if the consumer is UK-based.

Online gambling now dominates the betting sector, generating over £6.9 billion annually in gross gambling yield (GGY). This has accelerated HMRC’s plans to create a structure that they claim will match the scale, innovation, and complexity of the online betting sphere.

“The tax system needs to keep pace with the developments and innovation,” HMRC stated, stressing, “The government believes that the time is now right to consider further reform to create a modern and coherent tax system that is simpler to use for the UK-facing remote gambling industry.”

Betting Sector Pushback Against Potential Rate Changes

In light of HMRC’s announcement, industry members are concerned that a universal formatting of the system is ultimately masking an inevitable tax hike. Of these concerns, many betting operators have voiced fears that the government will raise the current tax rate of 15% to match that of Remote Gaming Duty.

Despite Chancellor Rachel Reeves rejecting the idea in the Autumn Budget of 2024, Grainne Hurst, CEO of the Betting and Gaming Council (BGC), said that reversing that decision might not only backfire on the government but could also be devastating for the racing industry’s revenues.

The British Horseracing Authority also mirrored Hurst’s views, arguing that the sport depends on generated betting revenue and that a tax hike could inflict significant damage across the industry.

Industry insiders’ overriding concern is that the government’s increasing levies could further fuel black-market activity. Given that the Charity group Deal Me Out has already reported a growing migration to offshore operators, increased industry regulation and tax obligations could accelerate the consumer exodus.

The proposed HMRC consultation is accepting industry feedback before it closes on July 21, 2025. The government expects to outline its final policy suggestions during the autumn budget. Nevertheless, any new reforms will take a while before implementation, with the government indicating RBGD will not be rolled out until at least October 2027.

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Terms of the settlement were signed off by Dame Victoria Sharp, President of the King’s Bench Division at the Royal Courts of Justice at the Crown Court of Southwark.

HMRC had investigated GVC Holdings, the former entity of Entain PLC, for breaching the Bribery Act 2010. The DPA addresses allegations of failing to have adequate procedures to prevent bribery, particularly in its Turkish-facing business, which was sold in 2017.

As stated by the firm, a £585m settlement with the Crown Prosecution Service (CPS) has been agreed. The owner of Ladbrokes and Coral will pay the settlement to HMRC. 

Entain emphasised that it has since transformed as a company and it is a legacy issue as the illegal activity occurred prior to its 2020 rebrand when it traded as GVC Holdings. 

Chairman Barry Gibson commented: “This legacy issue pertains to a business divested by a past management team six years prior. The company has undergone significant changes since then, and the DPA process has underscored the profound evolution from the GVC of the past to today’s Entain. 

“We remain focused on advancing our operations exclusively within regulated markets and are acknowledged as a leading, responsible entity with unparalleled corporate governance across our business.”

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The case stemmed from its previous Turkish business, which it sold in 2017. The owner of Ladbrokes and Coral will pay the settlement to HMRC. 

Entain emphasised that it has since transformed as a company and it is a legacy issue for the company as the illegal activity occured prior to its 2020 rebrand when it traded as GVC Holdings. 

The original HMRC investigation commenced in 2019, over Entain’s former subsidiary, Headlong, and its online gambling activities in Turkey. 

Chairman Barry Gibson commented: “This legacy issue pertains to a business divested by a past management team six years prior. The company has undergone significant changes since then, and the DPA process has underscored the profound evolution from the GVC of the past to today’s Entain. 

“We remain focused on advancing our operations exclusively within regulated markets and are acknowledged as a leading, responsible entity with unparalleled corporate governance across our business.”

Investors have been notified that the finalisation of the settlement is forthcoming, with Entain poised to seek final judicial approval for the DPA on 5 December.

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The company initially received a production order from HMRC on November 28, 2019, which required the provision of information relating to the online betting and gaming entity in question, which it held from 2011 to 2017.

However, despite believing that this was directed towards payments processes of third party suppliers, this scope was widened on July 21, 2020, to examine potential corporate offending.

Offering an update regarding the ongoing inquiry, the operator noted that it is in deferred prosecution agreement negotiations with the Crown Prosecution Service, and is working towards achieving a resolution of the inspection.

In regard to the ongoing review of the-then GVC Holdings’ former Turkey-facing business, the firm acknowledged that “historical misconduct involving former third party suppliers and former employees of the group may have occurred”.  

Barry Gibson, Chair of Entain, commented: “We are keen to achieve a resolution to what is an historical issue relating principally to a business that was sold by the group nearly six years ago.

“Entain has been through a period of extraordinary transformation since then, and has taken decisive action to be a best-in-class, responsible operator with outstanding corporate governance.

“The board and leadership teams have been overhauled, 100 per cent of our revenue is now from regulated or regulating markets, and our business model, strategy and culture have been reviewed, analysed, and stress-tested. We will continue to work closely with both the CPS and HMRC to ensure that this matter can be concluded as soon as is practical.”

Entain, which offloaded the assets in question over five and a half years ago in order to fulfil requirements regarding the impending takeover of Ladbrokes Coral, noted that the aforementioned sanction, of an unknown size, is the “likely” outcome.

The sale off the wholly owned subsidiary, Headlong, was finalised in early November 2017, to Ropso Malta for performance related earn-out consideration of up to a maximum amount of €150m in cash. This was receivable on a monthly basis across a five year period.

A statement issued by the company read: “Whilst prosecution of a group entity or entities, which may defend the action successfully or be convicted, remains a possibility, the group is seeking to conclude DPA negotiations with the CPS. Negotiations remain ongoing and any resolution would be subject to judicial approval.

“While the company cannot say at this stage what the consequences of the investigation will be, it is likely that they will include a substantial financial penalty which is yet to be determined. The company cannot identify reliably at this stage the size of any financial penalty.

“Since the investigation first commenced, the group has undertaken a comprehensive review of anti-bribery policies and procedures and has taken action to strengthen its wider compliance programme and related controls.  

“Whilst the discussions with the CPS remain ongoing, the board is content with progress to date and looks forward to pursuing an orderly conclusion to this matter.”

The offences under investigation include, but are not limited to, section 7 of the Bribery Act 2010.

This states, among other things, that organisations must have “adequate procedures” in place to prevent associated persons bribing others to retain business or gain an advantage.

“The group continues to co-operate fully with HMRC and the CPS,” the statement ended. “It is not possible at this stage to say how the investigation into the company will conclude.” 

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Within its market update, the company revealed that HMRC will issue a refund of £77.5m paid machine duties paid from April 2006 to January 2013.  

Rank’s statement read: “The refund has been agreed at £77.5m and should be received by the group shortly. Interest is also due on the claim, which Rank expects to be circa £5.5m. Both amounts will be subject to corporation tax at 19 per cent.”

In April 2020, an Upper Tribunal judgement voted in favour of Rank and Betfred’s claim against HMRC that had incorrectly imposed VAT-specific charges on land-based gaming machines.

The bookmakers’ ten-year appeal was settled as Upper Tribunal judges backed an original verdict that HMRC had failed to make a “clear distinction on the supply of games defined as FOBTS”.

This summer, Rank was granted a 60-day extension by the Tribunal Tax Chamber to resolve its final settlement with HMRC, with the company informing investors that it would pursue a minimum £80m repayment.

Proceeds of the refund will be used to strengthen Rank’s ongoing transformation programme and balance sheet, with the settlement to be included in the company’s next interim results published on January 27, 2022.

Following the judgement, William Hill issued a statement confirming that it would begin a “gaming machines VAT challenge – in which management pursues a ‘material net cash recovery of between £125-£150m’”.  

Meanwhile, it is estimated that Entain’s Ladbrokes and Coral subsidiaries could reclaim a combined and £200m VAT repayment. 

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162 

Better Collective has highlighted its expansion across the US, as well as its key breakthroughs in media partnerships, as two key drivers of growth.

Releasing its 2021 interim results for the period ending June 30, the company’s Q2 revenues stood at $40m, an increase of 162 per cent compared to the same period in 2020 ($15.2m).

The firm maintained growth across its publishing network, registering Q2 revenues of $26m – up 79 per cent – and period EBITDA outcome of $11.2m – up 68 per cent compared to 2020 – as its platforms and media partnerships benefitted from a strong Euro 2020 performance. 

“Q2 marks yet a record quarter in terms of revenue and NDCs delivered to our partners,” commented Jesper Søgaard, co-founder and CEO of Better Collective. “At the same time, we continue to record strong profitability and cash flows. The strong performance is especially driven by the US business, and by our media partnerships that saw breakthrough performance during Q2.

“The peak of the quarter was the closing of our largest acquisition to date, Action Network, which is a game-changer and consolidates our leading sports betting media position in the US.”

80

The UK tax authorities, HM Revenue and Customs, has concluded that it will not appeal against a tribunal ruling involving casino operator Rank Group over value added tax on slot machines. 

The casino operator noted that the first-tier tribunal had agreed a 60-day extension to allow HMRC and Rank to agree the exact size of the claim, which the company still values at £80m. 

Concerning VAT paid on slot machine income in the period of April 2006 to January 2013, the decision was handed down by the first-tier Tribunal on June 30, 2021. 

27001

Gaming Innovation Group has been recertified with the ISO 27001 accreditation for four of its core products – its PAM platform, frontend development & CMS solution, its sportsbook platform and data platform.

The certification will be subject to annual surveillance audits and will cover a three-year period. Additionally, GiG has been awarded accreditations for headquarters in Malta – the GiG beach office – as well as its Spanish and Latvian offices.

Using a ‘top-down, risk based approach’, ISO 27001 assesses and identifies specifications and requirements for comprehensive information security management systems (ISMS).

The certification is accepted by regulatory bodies as an attestation to organisation’s ISMS, allowing GiG to ‘optimally and centrally evidence its dedication to information security’.

By holding the certification, GiG will be able to ‘smoothly onboard employees’ for its platform department in all three locations while keeping its operations in line with the ISO accreditation’s rules of conduct.

14.2

Publishing its ‘2020/2021 Annual Report & Accounts’ – period ending March 31 – The UK Gambling Commission has cited the tough regulatory climate in governing UK gambling under the circumstances of the global pandemic. 

However, despite the challenges, the UKGC issued in excess of over ‘£30m in fines and regulatory settlements’ during last year.

Noting a slight decline of 0.6 per cent in total gross gambling yield to £14.2bn, the pandemic year registered approximately 22.1m gambling consumers, down 2.6m from 2019 results.

Moreover, the Commission also outlined the heightened uptake of online gambling – which registered a 1.3m increase in new consumers to 12.1m – underlining the UKGC’s importance for extra vigilance.

21.1

Seasonality was cited as a “recurring challenge” by Catena Media as its 2021 interim results showed a one per cent dip in casino revenue.

Catena reported €21.1m (2020: €21.2m) in year-on-year revenues along with a drop of four per cent in adjusted EBITDA to €12.3m (2020: €13.9m).

The company also made reference to the relaxation of COVID restrictions, which it stated has resulted in fewer sessions as players shifted offline, causing the slight dip in year-on-year revenue and earnings. 

Updating investors, Catena Media, CEO, Michael Daly, noted: “I am exceptionally pleased with the group’s financial results for the second quarter, in which we surpassed last year’s revenue by nine per cent and lifted adjusted EBITDA by one per cent. 

“This outcome represents a notable achievement considering the one-off spike in casino gaming seen in the second quarter of 2020, when COVID-related lockdowns sparked an unprecedented surge in consumer interest and player activity. 

“The results demonstrate the robustness of our business model as they came in the face of low seasonal sports activity in the US, the re-opening this year of land-based entertainment venues in North America and other locations, and a sharp increase in product investment in Q2 compared to the same period last year. 

“These factors together explain the expected drop in quarter-on-quarter revenue and EBITDA. “

31.5

Mr Green has been fined SEK 31.5m (€3m) by the Swedish regulatory body – Spelinspektionen – due to the William Hill subsidiary failing to fulfil its AML and customer care duties.

Split into two, Spelinspektionen fined Mr Green SEK 30m (€2.9m) due to customer care failures as its team were deemed to have not undertaken “sufficient measures to help customers reduce their gambling spend”. 

In addition to the first fine, the company was also penalised SEK 1.5 (€140,000) for failing to maintain its customer reporting duties as a requirement of the Money Laundering Act – whose rules are applied within Sweden’s reformed Gambling Act 2018.

Spelinspektionen’s casework provided details on 15 customers that displayed problematic behaviours or AML criminal intent engaging with Mr Green between the period of January 2019 to June 2020.

66

Gambling.com Group Limited highlighted “continued strong top-line growth” as it published its Q2 2021 financial results. 

Reporting its operating and financial results for the second quarter ending June 30, 2021, the company revealed revenue growth of $10.4m – a 66 per cent increase – compared to $6.2m in the same period in 2020. 

Furthermore, the firm reported a Net income of $2.3m, $0.08 per diluted share, compared to a net loss of $0.4m, a loss of $0.02 per diluted share, in the prior year. 

Adjusted EBITDA of $5.5m; grew 46 per cent compared to $3.8m in 2020, representing an Adjusted EBITDA margin of 53 per cent. Additionally, free cash flow of $3.1m decreased 3 per cent compared to $3.2m last year.

“Our second quarter results (which were our first interim financial results as a public company) were highlighted by continued strong top-line growth, and, based on our Adjusted EBITDA margins, we are among the most profitable names in the online gambling industry,” said Charles Gillespie, chief executive officer and co-founder of Gambling.com Group.

“Since our founding in 2006, we have built an affiliate marketing powerhouse with recognisable brands around the globe. Players trust our services to help them find a safe, fun and legal betting experience while our B2C operator clients utilise our best-in-class technology platform to support their increasingly important customer acquisition initiatives. 

“We are incredibly excited about the next step in this journey as a public company and look forward to sharing the success with our new investors.”

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The casino operator noted that the first-tier tribunal had agreed a 60-day extension to allow HMRC and Rank to agree the exact size of the claim, which the company still values at £80m. 

Concerning VAT paid on slot machine income in the period of April 2006 to January 2013, the decision was handed down by the first-tier Tribunal on June 30, 2021. 

Pubs, arcades and betting firms are set to receive billions in tax refunds after they were unfairly charged VAT by the government on some of their gambling machines.

Earlier this year, The Times reported that up to 1,000 UK businesses that operated fruit machines, one-armed bandits and coin-pushers were reviewing whether to claim compensation from HMRC due to overruled calculations on FOBTs charges.

The dispute relates to HMRC collecting VAT charges on gaming machines from 2005-to-2013. The long-running issue had been challenged by Betfred and Rank Group Plc who claimed that HMRC had broken its ‘fiscal neutrality rules’ by imposing a VAT-specific charge on land-based FOBTs, whilst no similar charges were applied to traditional and online casino games.

In April last year, an Upper Tribunal review led by Justice Mann and Judge Thomas Scott sided with bookmakers, ruling that HMRC had never applied a ‘clear distinction on the supply of games defined as FOBTs – a factor that should have allowed businesses to claim VAT exemptions under the ‘1994 Value Added Tax Act’.

Following the judgement, which HMRC could no longer appeal, William Hill and Entain’s Ladbrokes Coral unit declared that they would examine tax rebates totalling over £350m – as media speculated that HMRC industry payout would total plus £1bn.

Publishing its 2020 corporate accounts, Betfred – the Done family-owned betting business – reported that it had secured an ‘exceptional credit charge’ of £99 million from its VAT appeal.

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