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Posted March 28, 2014 by John Baintree in News
 
 

Budgeting to Balance the Odds for Betting and Bingo

bingo-happy
bingo-happy

As the hullabaloo that is Westminster budget speeches faded out along Westminster’s corridors, the pundits and plaudits started to examine Chancellor George Osborne’s fifth budget in a little more detail.

Weren’t we all delighted with the news that the “crack cocaine” of gambling, the fixed odds betting terminal (FOBT) was to be hammered? Weren’t we all delighted that the traditional bingo hall was to be given a slightly easier ride in the taxation wars because of a change in the way duty is raised in the nation’s bingo hall’s?

Well, yes and no. Like all budgets, this year’s speech really was a give with one hand and snatch back with the other affair, especially for the gambling industry. The taxes now levied on FOBTs seems to be quite punitive but despite the measure’s surprised appearance, it is not really hard to understand why the tax has been applied when you consider the bad press that FOBTs have been receiving of late.

The duty on profits has been raised from 20% to 25% which does not seem to be too draconian until you look more closely. Remember that the likes of William Hill and Paddy Power make a significant chunk of their earnings from the terminals rather than the more traditional turf accountancy. Ladbrokes generated £11.6bn revenue from the terminals in their betting shops giving health profit of £422milliuon, some 28% profit margin – not bad money if you can get it!

Sadly the financial markets don’t seem to consider the morality of FOBTs. Despite the calls for changes FOBT regulation, the large bookies chains have all seen share process tumble, William Hill by 7% and Paddy Power by 3% and not surprisingly Ladbrokes is now threatening to close more of its shops. From this persons perspective, if you can’t make money without resorting to FOBTs then find another location where they have more money to throw away gambling.

Of course the good news from Georgie Porgie is that he has eased the tax burden on bingo hall operators by changing the way their taxes are levied. The duty paid bon winnings is halved from 20% to 10%, in theory, putting money back into the hands of punters, encouraging them to play more often.

Indeed Mecca Bingo, operator of 97 halls saw its shares rise by 7.5% and causing them to announce plans for a further round of new bingo hall openings.

So what’s bingos gain is FOTBs loss – now how does that sound to you?