Customs will consult on reforming general betting duty to enable the gambling and racing industries to flourish in the internet age.

Customs will be happy to receive any proposals, but the consultation document will focus on the leading options which are:
– requiring the bookmaker to account for duty based on the location of the punter placing the bet; and – basing duty on the gross profits of a bookmaking business.

The challenge is to create a robust tax regime that ensures:
– a fair basis for UK bookmakers to compete internationally;
– a fair opportunity for horse racing to secure financial support; and
– a fair contribution from the industry towards general tax revenues.

There is good news for seaside towns, as the Chancellor announced that he is abolishing duty on certain types of slot machines traditionally found in seaside arcades. Duty on the type of jackpot machines found in social clubs will also be cut.

Duty on the popular modern “all cash machines”, particularly common in pubs and inland arcades, will go up in the light of the higher prize levels allowed for these machines under social regulation. The increase will be introduced in August 2000. However because licences are renewed annually, the impact of the increase should not be felt until next year.

Overall the reforms of duty on amusement machines will be revenue neutral in a full year, with seaside arcades and social clubs benefiting to the tune of UK Pounds 5 million.


The consultation exercise on the options for reforming general betting duty will run until 30 June 2000. The Government intends to take a decision on the way forward in time for the Chancellor’s autumn Pre-Budget Report, and hopes to make any necessary legal changes in next year’s Budget.

Plans announced in the PBR to modernise the ban on advertising overseas betting services in the UK are no longer necessary as a recent Court of Appeal decision confirmed the comprehensive coverage of the existing law.

To date the move of some bookmakers offshore has had little impact on the general betting duty yield which is still on the increase. In 1997/98, Customs collected UK Pounds 462 million which increased to UK Pounds 480 million in 1998/99. Receipts for the first eleven months of this financial year are 3% up on the same period last year.

Overall the changes to amusement machine licence duty will reduce tax revenues by UK Pounds 5 million in 2000/01 but will be revenue neutral in subsequent years.

Casinos will also benefit to the tune of about UK Pounds 2 million from a second year of indexation of the gaming duty bands.


General betting duty

1. General betting duty (GBD) applies to bets placed with a bookmaker in the UK, other than at a racecourse. It is charged at a rate of 6.75% on the value of the stake. Bookmakers generally make a total deduction of 9% on bets, to cover the duty, their 1.25% contribution to the Horserace Levy, and their administrative costs. GBD contributed UK Pounds 480 million in revenue in 1998/99, of which around UK Pounds 50 million came from credit bets placed over the telephone. The Levy is paid to the Horserace Betting Levy Board (HBLB) and is used to improve horseracing through the provision of prize money, fixture fees and grants. It is payable only on betting transactions on horse racing, and in 1998/99 amounted to UK Pounds 57 million.

2. In May 1999, Victor Chandler International, operating from a base in Gibraltar, started offering “tax free” telephone bets to UK customers, levying a deduction of 3%. The three largest UK bookmakers have, over the last year, also moved some of their operations offshore, and some smaller offshore operators have also started targeting the UK market. Typically, these bookmakers offer nil deductions over the internet and 3% over the telephone. So far, however, there has been no significant impact on GBD revenue, which has continued to rise, with receipts 3% higher in 1999/2000 (up to February) than in 1998/99.

3. The Government does, however, recognise that the bookmakers need a duty structure that allows them to take advantage of the increasing globalisation in this industry and remain competitive within the UK. HM Customs and Excise will be consulting on options for reforming GBD. Under one option, bookmakers would account for duty on all bets placed from the UK – so those who were offshore would still have to register and pay tax here on all the bets they took from UK punters. Under another option, suggested by the bookmakers themselves, UK-based bookmakers would account for tax on the balance between bets placed and winnings paid out, so the tax would no longer appear as a separate, additional charge to the customer.

4. The consultation document, “Our Stake In The Future”, is available at

Amusement machine licence duty

5. The removal of the UK Pounds 645 annual licence charge on small-prize “amusement with prizes” machines (AWPs), costing 10 pence per play or less, will provide a boost to seaside arcades, and will help to support the Government’s ‘Tomorrow’s Tourism’ initiative, aimed at reviving traditional seaside resorts.

6. Help has also been provided for the non-profit making club sector in the form of a duty cut for “10 pence per play” jackpot machines. The annual charge for a licence to operate one of these machines has been reduced from UK Pounds 1815 to UK Pounds 1375.

7. All cash machines (ACMs), which can be operated only in environments which restrict entry to children, such as pubs, are able to pay out up to UK Pounds 15 in cash, and it is inequitable to continue to band them with small-prize AWPs. The duty on ACMs costing more than 5 pence per play has, therefore, been increased to UK Pounds 680 a year. Because the duty is due on licences which can be bought for up to a twelve month period the impact of the increase should not be felt by operators until next year.

8. Some minor administrative changes have been introduced regarding arrears of licence duty; the duration of summer licences; and the duty liability of certain video games.

9. Overall, these changes to the structure of the duty align the licence charge more closely to the prize levels and price per play of particular types of machine. The changes will be introduced from 5 August 2000.

10. Details for businesses are published in Budget Notice 34/2000 which is available from Customs and Excise Advice Centres and from the Customs and Excise Internet site.

Gaming duty

11. Gaming duty is charged as a percentage of casinos’ “gross gaming yield” (the difference between stakes placed and winnings paid out), on the basis of a banded structure. The Government is committed to adjusting the duty bands in line with inflation, for the lifetime of this Parliament. This protects the casinos against increases in their tax liability brought about by erosion of the value of the duty bands over time. The changes laid out in the table below are effective for accounting periods beginning on or after 1 April 2000.


Present bands Revised bands
The first UK Pounds 462,500 of The first UK Pounds 470,500 of gross gaming yield ……2.5% gross gaming yield ……2.5%
The next UK Pounds 1,027,500 of The next UK Pounds 1,045,500 of gross gaming yield ……12.5% gross gaming yield ……12.5%
The next UK Pounds 1,027,500 of The next UK Pounds 1,045,500 of gross gaming yield ……20% gross gaming yield ……20%
The next UK Pounds 1,798,500 of The next UK Pounds 1,830,000 of gross gaming yield ……30% gross gaming yield ……30%
The remainder ……40% The remainder ……40%

The changes will result in an industry gain of some UK Pounds 2 million. 12. Details for businesses are published in Budget Notice 67/2000 which is available from Customs andExcise Advice Centres and from the Customs and Excise Internet site.

Related reading