The UK was one of the first countries in the world to license and regulate online gambling. But that has meant that casino operators have been subject to a great deal of scrutiny and have had to comply with numerous legal obligations.
One of the most recent revisions of the UK’s gambling tax laws is the institution of the Point of Consumption tax for online gambling, and as the lawmakers are tightening the bonds in this area, the use of Free Spins as a promotional and loyalty reward for slots players may be a thing of the past…
This is due to the fact that Chancellor George Osborne stated in his speech earlier this year that from August 2017 online casino and bingo operators would be liable for tax on free play offers. This is being done in order to ensure the same level of compliance in online gambling that sportsbooks and the race betting industries are already subject to when it comes to discounted and/or free wagering under the General Betting Duty. This point was later confirmed in a budget document.
Implementing these changes is set to cost the UK government a considerable £20 million, but it will be money well spent if the projected tax revenue of £110 million in 5 years’ time comes to fruition.
These earnings do however depend on online casino licensees continuing to offer free spin promotions at the current level. This however is highly unlikely given the fact that they are already facing increased pressure to their bottom lines in complying with licensing and tax liabilities in the various markets, overheads which have been added in addition to their annual licensing fees paid to various software providers who power their casino games and platforms and staff costs in recent years.