As we know, the new 15% tax for all UK-facing gaming operators came into effect late last year. Point of Consumption Tax (POC) was, of course, badly received by gaming operators. Well known industry giants such as Mansion and Pinnacle immediately pulled out of the UK market as soon as they caught wind of the new legislation as early as September 2014. The RGA complained that the level of POC tax is too high, unsustainable and will have negative impacts to players and operators.
The effects to major operators are fairly obvious; lower profits leading to lower budgets and plenty of cost-cutting and rejigging of processes. Marketing professionals, as is fairly common in times of financial cutbacks, will suffer the most in the long term. Gambling is notoriously hard to market as people tend to want to gamble or not want to gamble and stick, making it hard to for a marketer to twist their arm. We’ll see marketing departments scale down and focus solely on mobile. Online marketers will need to understand where their traffic is coming from and move away from widespread PPC strategies.
Smaller brands and even affiliates are also feeling the brunt. Footy Accumulators, a leading UK sports betting affiliate with a substantial social media following, told us that the pinch in revenue for the big UK bookies is having collateral effects. ”We are certainly having to work harder to achieve the levels of revenue we are used to, ” said Matthew Timms, Ops Director for Footy Accumulators. He also went on to explain that the reason for this is directly linked to POC tax as their clients “deduct the 15% tax they have to pay from the affiliate’s earnings”.
In times of austerity and constant revelations of big corporations dodging tax, my view, as a tax payer, certainly differs from that of the big UK betting operators. I find it very refreshing to finally see HMRC use their powers to clamp down on big companies using tax havens and various other loopholes to essentially hog money that should be going into the public purse - that just isn’t cricket. It is a shame, however, to see smaller companies and affiliates suffer, but all in all, a fair move.
The next few years will see a consolidation of market share and a fierce marketing battle for customer loyalty. Bigger brands will enforce a short-term spike in their marketing spend over the coming six to twelve months, but this will decline once the smaller players lose out.
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