UK Online Gaming Tax (POC) Could Increase in 2021

United Kingdom Gambling Commission is diligently working to maintain a level playing field for UK casino players. They are also responsible for enforcing the laws created by the parliament to regulate the land-based and Internet gambling industry nationwide. In recent years, they came up with a couple of proposals and solutions that generated mixed reactions among players and casino operators. Taxation has always been a sensitive issue and a trend has emerged recently, as taxes are generally going up every year. 2021 could see another increase in the POC packs, after the 2019 hike.

Why is the POC tax going up?

The land-based and online gambling industry in the United Kingdom generates a lot of revenue for state coffers from casino sites and it is regarded by the government as a major source of cash. The fact that it is well regulated by a respectable body such as the UK GC helps them project an image of trustworthiness. Casinos have to go through a lengthy and sometimes challenging process to acquire the necessary license. Later on, they need to pay their dues, in the form of taxes and the point of consumption tax is one of the later additions.

In 2018, the government proposed and later on implemented new taxes, such as the POC while reducing the minimum wagers on fixed odds betting terminals. The tax applied to online casino revenue increased by 40%, with casinos paying 21% instead of 15% starting on October 1, 2019. This move was criticized by the gambling operators, but it was still slightly lower than expected and didn’t have a crushing effect on their profits. Once one other worrisome is that the lawmakers are ready to further increase the point of consumption tax and 2021 looks like the year for the next hike.

The RGD rate could surge to 25%

Lawmakers sometimes test the waters and the public’s reaction to controversial projects by leaking certain information to the media. Recently, a media report announced that the RGD rate could increase up to 25% in 2021 and this sent shockwaves through the entire gambling industry. The stocks of some major bookmakers and online casinos plummeted as a result and they are likely to shrink in the upcoming weeks. Even so, there were operators who were rather relieved to know that the increase won’t be as high as they feared, but expressed their concern for future hikes.

Analysts estimate that further increases of the point of consumption rate will cost the gambling industry hundreds of millions of pounds. This is still a very profitable venture, but if the costs continue to climb at this rate, many casinos and gambling operators listed here will struggle to make a profit or even survive in the competitive market. For the time being, the government is happy with the prospect of bringing more money to the state coffers but in the long run these harsh measures could backfire badly.