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 our latest forecast, we expect betting and gaming duties to raise £3.0 billion in 2018-19. That would represent 0.4 per cent of all receipts, and is equivalent to around £100 per household and 0.1 per cent of national income.

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

  • 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. In 2016-17 this raised £534 million (19.5 per cent of total cash betting and gaming duties).
  • Pool betting duty (PBD) – charged on bookmakers’ profits for bets where winners have a share in a pool of a stake of money. PBD is paid at a fixed rate and raised £4 million (0.2 per cent of the cash total) in 2016-17.
  • 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). MGD raised £707 million (25.8 per cent of the cash total) in 2016-17.
  • 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. The duty paid is a fixed rate of the provider’s profits. RGD raised £357 million (13.0 per cent of the cash total) in 2016-17.
  • 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. It raised £273 million (10.0 per cent of the cash total) in 2016-17.
  • 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. Bingo duty raised £35 million (1.3 per cent of the cash total) in 2016-17.
  • 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. Lottery duty raised £832 million (30.3 per cent of the cash total) in 2016-17.

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. The levy raised £50 million in 2016-17.

  • Latest forecast

    Our latest fiscal forecast was published in March 2018. Betting and gaming duty receipts are expected to remain broadly flat as a share of GDP over the next five years. This reflects our assumption that spending on gambling will move broadly in line with overall nominal household consumption, which is also set to rise broadly in line with the economy as a whole.

    Expand to read the extract from our March 2018 EFO

     

    Back to top

  • Latest monthly data

    Betting and gaming duty receipts tend to follow a quarterly pattern throughout the year, but can be uneven due to trader accounting periods and the timing of cash payments over the year. Fluctuations in receipts can be caused by a variety of factors, such as large National Lottery rollovers, which often lead to one-off peaks in receipts.

     

    Back to top

  • Forecast methodology

    Forecast process

    The OBR commissions forecasts of betting and gaming duty receipts from HM Revenue & Customs (HMRC) 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 forecasts for betting and gaming duty receipts are estimated using several econometric models, one for each duty. These econometric models tend to be driven by our forecasts for overall nominal consumption and economic growth.

    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. See the ready reckoners section below for more information on the effects of these determinants on betting and gaming duty receipts.

    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 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.

    Back to top

  • Previous forecasts

    Betting and gaming duty receipts have outperformed our forecasts more often than not in recent years, although the bulk of this difference reflects policy changes that are discussed below rather than underestimating the underlying trends in receipts.

     

    Back to top

  • Policy measures

    Since our first forecast in June 2010, the Coalition and Conservative Governments have announced 5 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 Annex A of the relevant Economic and fiscal outlook.

    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.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.

    The recently announced lower maximum stake on fixed-odds betting terminals will affect our betting and gaming duties forecasts. These effects will be assessed in our next EFO.

    Back to top

  • 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 2018 forecast 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 ‘Tax and spending ready reckoners’ spreadsheet we published alongside our 2017 Fiscal risks report.

    The table below shows that:

    • 1 per cent higher nominal consumption growth in 2019-20 would boost total betting and gaming receipts by around £5 million a year, given our assumption that amounts spent on gambling move in line with nominal consumption.
    • 1 per cent higher economic growth in 2019-20 would boost total betting and gaming receipts by around £10 million a year, also reflecting our assumption that it would feed through to more being spent on gambling.
    • 1 per cent higher household disposable income growth in 2019-20 would boost total betting and gaming receipts by around £5 million a year.

    Betting & gaming duties ready reckoner

    Back to top