Budget 2012 Tackles Slot Machines

There’s been a huge amount of chatter this week in the community following the Chancellor’s announcement of a 20% duty to be imposed on fruit and slot machines. Of course, the new duty – called the ‘Machine Games Duty (MGD)’ simply replaces the existing Amusement Machine License Duty and VAT, but the existing rate is 17% – which most bookies agree is a revenue neutral position.

The move has been slammed by industry organizations including the Association of British Bookmakers, which estimates the new duty will cost 11,000 jobs across the UK. Major high street companies William Hill and Ladbrokes are expected to take £11m and £14m hits to their profit margins, respectively.

Slot game blog writers have also joined the chorus, saying that the government already claims £1bn from the gaming industry and that the increased tax was ‘unsustainable’ and would result in the closure of many shops.

Online gaming has not escaped the pinch either, with changes to taxation laws switching the basis from a place-of-supply to a place-of-consumption. As many companies have moved their operations offshore to take advantage of the favorable tax conditions in places like Gibraltar or Malta, this is expected to have a huge impact. Some 90% of gaming is supplied to UK citizens by offshore companies, and to encourage them to return the 15% levy will now be charged on the basis of the location of the player, rather than the company. This legislation is not expected to take effect until 2013.