In many bingo halls in the UK slots and fruit machines generate as much as 70% of all income. Many internet bingo sites have reported that as much as 50% of all revenues are generated by online slot games. Taxes have been a big issue for bingo halls which are taxed at a much higher rate than other forms of gambling and internet bingo sites. Recently the UK government announced plans to replace the AMLD (Amusement License Duty) and VAT taxes with a MGD. (Machine Gaming Duty) The change will take place in February 2013.
The Machine Gaming Duty will be subject to budgetary control and the rate has not been announced by the government. At the present time it is unclear how the changes will affect gaming operators. Some expect gaming operators with fewer gaming machines to increase the number if the fixed costs barriers are removed. At the present time gaming operators such as bingo halls and casinos pay a yearly license fee for every gaming machine which varies depending on the category of the machine. The tax is payable regardless of how much money the machine makes. A 20% VAT tax is payable on the revenues generated by the machines but some of the VAT tax is reclaimable against some business expenses.
Similar to current bingo taxation the new Machine Gaming Duty will not give gaming operators VAT relief on other costs. The new strategy poses a risk to operators and could easily cost them greater amounts than they are now paying. The new Machine Gaming Duty rate will be announced in the government’s budget in March 2012. Smaller gaming operators with fewer slot machines will not be greatly affected but operators with that have a high number of machines could find themselves paying significant amounts of money. Just how operators will be affected is impossible to determine until the tax rates are announced.
The new Machine Gaming Duty will have two classes. One class will be lower and will cover D machines which have a 0% Amusement License Duty. D machine payouts are limited to £5 cash or £8 prize payout with top wagers limited to 10p.and under. Operators with fewer machines and put off investing in more machines because of the Amusement License Duty may be tempted to invest in more slot and fruit machines. Currently the fixed Amusement License Duty is about £3,000 annually. The Machine Gaming Duty rate will be tied to revenues and there will be no upfront fixed costs. The UK gaming industry will be watching next year’s budget discussions closely.
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