The UK's lowering of maximum bets on fixed odds betting terminals (FOBTs) is going to cause a significant shortfalls in tax revenues, and online gambling companies are going to see a tax hike to close the gap for the shortage.
The UK Treasury revealed that online betting firms will pay 21% tax on revenues, which is up from the 15% currently paid. The move comes after the UK is cutting the maximum bet on FOBTs to £2 from the current level of £100 in an effort to stem some addiction issues. The reduction will cause the UK to miss out on £1.15 billion in tax revenues by 2024.
Despite the huge hike, betting companies were expecting the rate to be higher, and as a result stock prices for those that would face the impact jumped.
Some politicians weren't happy with the decision, as they wanted the tax rate to be 25%. One of these critics was Labour MP Carolyn Harris, who said, "This will lead to many more vulnerable people's lives being harmed while the bookmakers will continue to make millions from fixed-odds betting machines. The bookmakers must be delighted and we can clearly see where the priorities of this Government lie."
The reduction of the maximum bet on the gambling machines is slated to be implemented in October 2019.