Tax by tax, spend by spend

Betting and gaming duties

This Forecast in-depth page has been updated with information available at the time of the March 2024 Economic and fiscal outlook. We are aware of a technical issue with our tableau charts across the site. Access the data from our March 2024 forecast supporting spreadsheets directly.

Betting and gaming duties are levied on either operators’ gross profits (total stakes received less prizes paid out) or total stakes across several different gambling regimes.

In 2024-25 we estimate that betting and gaming duties will raise £3.6 billion. That represents 0.3 per cent of all receipts and is equivalent to £124 per household and 0.1 per cent of national income.

Total betting and gaming duty receipts are the sum of several specific duties:

  • Lottery duty – charged on taking a chance or ticket in the UK National Lottery. The duty liable is a fixed proportion of total ticket sales. All lawful lotteries are exempt from the duty except the National Lottery. It is also payable on scratch cards and UK sales of Euromillions.
  • Machine games duty (MGD) – charged on the playing of machine games that pay out cash prizes. These include slot, fruit and quiz machines, as well as fixed-odds betting terminals. The duty paid depends on how much it costs to play a game, and the size of the potential prize. MGD is not payable on machine games that offer only non-cash prizes or where the cost of playing is greater than any cash prize. It was introduced in early 2013 and replaced the amusement machine licence duty (AMLD).
  • General betting duty (GBD) – charged on bookmakers’ profits for ‘general bets’, which include sports betting and bets on horse or dog racing, and their profits for spread bets, but exclude on-course betting. The duty paid depends on the type of bet and where it is made.
  • Remote gaming duty (RGD) – charged on gaming provider profits from remote gaming (for instance, games played online). This includes the profits from any ‘free plays’ the provider offers. ‘Free plays’ are any offers to gamble at zero or reduced rates, and include free games, introductory bonuses or matched deposits.
  • Gaming duty – charged on the gross gaming profits of UK-based casinos. The duty paid follows a banded structure, so more profitable casinos pay proportionately higher rates.
  • Bingo duty – charged at a fixed rate on the gross profits of the bingo promoter. All bingo games played in the UK are liable to the duty, except domestic bingo, small-scale bingo, non-profit bingo and bingo played on machines covered by MGD, which are all exempt.
  • Pool betting duty (PBD) – charged on bookmakers’ profits for bets where winners have a share in a pool of a stake of money.

On-course betting (where customers are present at the racetrack) is not liable to any of the above duties. It is covered instead by the horserace betting levy (HBL), which is charged on the gross profits of all betting on British horseracing (whether made on-course, in betting shops, or online). Receipts are collected by the horserace betting levy board (HBLB) – a UK statutory body.

  Forecast methodology

Forecast process

The OBR commissions forecasts of betting and gaming duty receipts from HM Revenue & Customs for each fiscal event. The forecasts start by generating an in-year estimate for receipts in the current year, then use models to forecast growth in receipts from that starting point. We provide HMRC with economic forecasts that are used to generate the duty forecasts. These are scrutinised in a challenge process that typically involves two rounds of meetings where HMRC analysts present forecasts to the Budget Responsibility Committee (BRC) and OBR staff. This process allows the BRC to refine the assumptions and judgements that underpin the forecasts before they are published in our Economic and fiscal outlooks.

Forecasting models

The forecast for betting and gaming duty receipts is based on an econometric model that forecasts total receipts (rather than individual duties) using annual data.

Main forecast determinants

The main economic determinants driving the forecast are those related to the tax bases for each duty. These can be unpredictable and subject to large fluctuations. The main determinant relating to betting and gaming duties is:

Main forecast judgements

The most important judgments in our betting and gaming duty forecast are:

  • In year estimates – our estimate for betting and gaming duty receipts in the current year is determined by year-to-date performance of receipts and indications from HMRC’s internal receipts monitoring. The in-year estimate determines the base year from which we use our model to forecast receipts growth.
  • The underlying trend in betting and gaming spending – we generally assume that household spending on betting and gaming will grow in line with overall household expenditure, absent changes in policy and other one-off factors. The extent to which this trend continues is a source of uncertainty in our forecast.
  • The effect of recent regulatory changes – for example, the smoking ban had a downward effect on bingo duty receipts in the year following its introduction.

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  Previous forecasts

Betting and gaming duty receipts outperformed our forecasts until 2017-18, reflecting policy changes, rather than underestimating the underlying trends in receipts. During the pandemic receipts were below previous forecasts as receipts fell, in line with household consumption.

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  Policy measures

Since our first forecast in June 2010, governments have announced a number of policy measures affecting our forecast for betting and gaming duties. The original costings for these measures are contained in our policy measures database and were described briefly in the Treasury’s relevant Policy costings document. For measures announced since December 2014, the uncertainty ranking that we assigned to each is set out in a separate database. For those deemed ‘high’ or ‘very high’ uncertainty, the rationale for that ranking was set out in our policy costings uncertainty database.

Betting and gaming policy changes since 2010 include:

  • The introduction of machine games duty – announced in Budget 2011, this came into effect in February 2013, replacing the amusement machine licence duty. The new duty regime was designed to have a negligible effect on the public finances, as explained in the Budget 2012 Policy costings document.
  • The changing of the tax regime from a ‘place of supply’ system to a ‘place of consumption’ system – announced in Budget 2012 Policy costings document. This measure was designed to discourage online gambling operators from moving offshore.
  • A cut in the rate of bingo duty from 20 to 10 per cent – announced in Budget 2014.
  • A new 25 per cent higher rate of tax on fixed-odds betting terminals – announced in Budget 2014.
  • Reform for the treatment of free plays for remote gaming – announced in Budget 2016. Free plays are instances where a customer gambles for free or at a reduced rate. This measure meant that some free plays became taxable.
  • A reduction in the maximum permitted stake on fixed-odds betting terminals – announced in Autumn Budget 2018, and amended in Spring Statement 2019. This measure reduces maximum permitted stakes from £100 to £2 from April 2019.
  • An increase in remote gaming duty – also announced in Autumn Budget 2018 and then amended in Spring Statement 2019. This measure increases the duty from 15 to 21 per cent of a gaming providers’ profits from April 2019.

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  Ready reckoners

Ready reckoners’ show how our fiscal forecasts could be affected by changes in selected economic determinants. They are stylised quantifications that reflect the typical impact of changes in economic variables on receipts and spending. These estimates are specific to our March 2023 EFO and we would expect them to become outdated over time, as the economy and public finances, and the policy setting, continue to evolve. They are subject to uncertainty because they are based on models that draw on historical relationships or simulations of policy settings. More information can be found in the ‘ready reckoners’ spreadsheet available on our data page.

The table below shows that:

  • Higher nominal household consumption increases betting and gaming receipts.
WordPress Data Table

 

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