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UK Gambling Act Under Review

Monday June 20, 2011 : Independent report claims laws limit operator capacity; tax too heavily
The independent business services firm Ernst and Young has published a report on the UK Gambling Act commissioned by the National Casino Industry Forum...and its findings are not happy conclusions.
Reporting on the study, the Telegraph newspaper notes that the Gambling Act 2005, which was expected to create more land casinos, has in fact limited the capacity of existing casinos to create new products.
Fixed stakes rules and quotas for gambling machines have left casino operators unable to absorb rising costs by passing them on to customers, and there has been a long term erosion of margins since the changes were introduced.
The study underlines the fact that the industry has seen a significant increase in its tax burden, Ernst and Young said, following the replacement of the casino duty rate of 2.5 percent with a starting rate of 15 percent – a 500 percent increase.
Just two months ago the Culture Secretary, Jeremy Hunt, said the Act “hasn’t worked” and there had been a “whole series of problems with it”.
The Government is currently reviewing maximum stake limits and premises entitlements – which are currently staggered by size of casino – for gaming machines.
Michael Silberling, president of the National Casino Industry Forum told the newspaper: “It’s time to take some of these words and put them into action. I think the UK would be grateful for more jobs, more capital investment and more taxes. The time is now, not later.”
The report makes a series of recommendations which could revitalise land casinos and generate an additional GBP45 million in annual revenue for the Treasury:
* Gaming machines that are legal outside casinos should be allowed in them,
* Local authorities should be given greater power to decide the location of casinos
* A five-to-one machines to tables ratio should be extended across all casinos.
* Casinos can currently only operate in one of 52 'permitted areas’ and these restrictions should be lifted so dormant or “underperforming” licenses can be switched to local authorities that want a casino, stimulating jobs and capital investment.
The casino industry, one of the most regulated form of gambling because casinos traditionally offered the highest stakes and jackpots, feels it is increasingly disadvantaged compared to other less regulated forms of gaming, including online gambling, the report notes.
Several major UK gambling companies have already moved their online operations offshore due to heavy taxation rendering them less competitive.
Silberling opined that the GBP45 million estimated extra tax take if the changes were implemented was a conservative estimate. “We think it’s closer to GBP100 million and we could create 5,000 jobs,” he said.

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