UK gambling giants Ladbrokes and William Hill released their financial results for 2015 last week. Not a surprise for anyone following the news that both were hit hard by the freshly implemented UK point-of-consumption tax (POCT). If you are not in the know, let me quickly bring you up to speed. The 15% tax applies to all bets placed from the UK, regardless of where the operator of the service is based. Prior to 2015 this was not the case and online gambling in Britain was regulated at the point of supply and not of consumption. After some serious battling from the side of gambling operators, the tax was finally implemented in late 2014. This year we are seeing the first results for bookmakers.

British Bookmakers Hit by High TaxesLooking at the online performance of the operators, Ladbrokes dipped £23.8m down compared to last year and for William Hills that is £126.5m (representing 29% drop in profit). Let’s analyse the results for each operator and try draw some conclusions.

For Ladbrokes the change was quite big in a negative way – a staggering £20.7m loss was reported last Tuesday, compared to the £17.3m profit for 2014. The operator assigned some of the drop to higher expenses in marketing, but still, the results are quite appalling. The increase in machine gaming duty (MGD) for land-based gambling from 20% to 25% in the UK has also had its share. On the bright side however, the online side of the business has grown 13% to £242.8m and presently represents 20% of Ladbrokes net revenue of £1.2bn.

In the case of William Hill, who made their financial results public on Friday, there were a total of 108 shops closed in land, to try and compensate for the losses due to the new taxations introduced. In a similar manner though, regardless of the losses suffered overall, the sales online skyrocketed 147% to £126.1m. This was a significant boost and a large percentage of the total operating profit, which if we were to not count the duties would have totaled at £291.4m.

If we were to imagine the results of both before and after the new tax implemented, we can easily see the significance of the difference.

Wiliam Hill
Net revenue with POCT £550.7m ↑4%
Net revenue without POCT £648m ↑23%
Net revenue with POCT £242.8m ↑13%
Net revenue without POCT £286m ↑33%

To do the maths for the British government, from those two bookmakers alone, they have pocketed £140.5m. It will be interesting to see if the results for the rest of the UK based operators will reflect similar tendencies. Important to note is also that this is the last year we will have to compare an year without the new tax being in place to an year where it has been. In 2017 we will be looking at two full years of POCT. As it stands it seems that operators will be focusing on online gambling as it seems to be one that is keeping the numbers in the green.


Chicago IRS Back Taxes Help_ Currently Non Collectible Status


British bookmakers hit by high taxes
Tagged on: