business unfairly targeted following news of gambling tax increase on
hike in taxes on fixed odds betting terminals (FOBTs) hammered shares in
bookmakers as the Treasury targeted controversial machines in high street shops
that have been dubbed the "crack cocaine" of gambling.
suffered a 12% fall in its share price as the City feared the company's profits
could be cut by almost a third after the chancellor raised duties on profits
made from FOBTs from 20% to 25%. Critics argue the machines lead to more cases
of problem gambling, while in February, a study produced by the Campaign for
Fairer Gambling showed that more than £13bn was gambled on the machines
by the poorest quarter of England's population.
However, the duty on bingo was halved as other
forms of gambling escaped treasury punishment.
In the wake of the
fixed-odds clampdown, high street bookie William Hill saw its share price
quickly drop by 7% as Paddy Power lost almost 3%. Ladbrokes, which also warned
it might now be forced to close more of its shops, was hardest hit because it
has greater exposure to the machines, which are placed in high street
bookmaking shops and allow punters to bet repeatedly on electronic games, most
Last year the firm's punters inserted £11.6bn
into the terminals making the bookie £422m, more than half the
gross profits of its shops.
Ladbrokes spokesman Ciaran O'Brien said: "The announcements mean yet
more taxes on an already heavily taxed industry another £75m to
add to the £1bn already paid. The pips are squeaking and we must surely
now be given some stability to continue to support our employment and tax base
while delivering for shareholders."
He added that the Treasury takes
more out of gambling in taxes than bookmaking firms do in profits and warned
that the change may prompt the company to shut some of its shops.
will close 40-50 this year. We may now have to look at closing more," he said.
The Treasury says it expects the tax to raise an extra £75m from
the industry in 2015/16, rising to £90m in 2018/19.
an indirect tax partner at accountants Deloitte, said: "I think it was a
surprise. There will be a lot of debate about it."
FOBTs have been a
highly controversial if hugely profitable addition to high street
bookmaking shops with both the coalition and Labour recently speaking out about
possible ways in which their surge may be curtailed.
Aside from his
raid on the betting machines, the chancellor also said that the government will
consult on extending the horserace betting levy to offshore bookmakers, a
charge currently paid by UK-based bookmakers to fund horseracing. The Treasury
said the "consultation will seek views on a range of options which are likely
to include developing commercial arrangements, modernising the existing levy
and a horserace betting right".
However, the shock news for high street
bookies was offset with surprise good news for the bingo industry, which saw
the duty it pays on its winnings halve from 20% to 10%.
had long complained it had been penalised in the 2009 budget when its tax rate
was unexpectedly increased from 15% to 22% - which later came down to 20%.
Bingo industry insiders had been expecting a cut back to the old rate of 15%,
which is also the level bookmakers are taxed on profits from sports bets.
However, they were delighted with their unexpected win.
chief executive of Rank Group, which operates 97 Mecca Bingo clubs across the
UK, said: "Today's announcement is an important boost for Britain's bingo
clubs, which provide a range of social and economic benefits for the
communities they serve. By bringing bingo duty into line with other forms of
gaming entertainment, the government has created a basis for renewed investment
Rank's shares rose by 7.5% and in contrast to
Ladbrokes' predictions, the company said it would now consider opening more
venues. "Rank has identified a number of towns and cities in Britain where, in
the light of today's announcement, it would like to develop new clubs," it