Remote Gaming Duty a Setback for Operators
The rate for the new Remote Gaming Duty has been set at 15 percent, Chancellor Gordon Brown announced in his Budget speech on Wednesday. The news comes as a disappointment to the industry, the AP observed, as the new rate may discourage tax-sheltered offshore operators from relocating to the United Kingdom. The Remote Gambling Association said in a prepared statement that the United Kingdom had "effectively priced itself out of the market," and that the new rate would make it "almost impossible" for U.K.-based operators to compete with offshore businesses, "especially those located in other EU jurisdictions."
The Rank Group came out firing Wednesday, unfavorably noting the new casino duty. "The Rank Group notes with dismay the changes to casino gaming duty announced in the Budget," it said. "The changes, which have been imposed without prior indication or consultation with the industry, will have a negative effect on the profit performance of Rank's casinos. It is estimated that the increase in casino gaming duty will be of the order of £8 million ($15.7 million) on an annual basis."
Thisismoney.co.uk reported on Thursday that Ladbrokes' £470 million ($925.6 million) takeover of 888 was "thrown into further doubt" following Wednesday's Budget. The new remote gaming tax rate gives 888 "little incentive" to leave its Gibraltar base for a "strong parent to shelter it from massive legal problems in the United States," the site says. The companies have been in on-again, off-again negotiations since November 2006.
Genting International has reportedly said its profits will be hard-hit by the new rates. "The changes will have a negative effect on the profit performance of the group [and] have been imposed without prior indication or consultation with the U.K. gaming industry," the Times quoted the company as saying. The paper said HM Treasury hopes to generate an extra £35 million ($68.6 million) each year from the rate increase, which sees land-based casino winnings taxed between 15 percent and 50 percent.
Reporting
Chartwell Technology on Tuesday released its first quarter results, which show a 24 percent increase in revenue to $5.5 million against Q1 2006. License fee revenue also grew 24 percent, totaling $5.3 million on the quarter. The company said it continued to maintain a strong balance sheet with $14.6 million in cash and short-term investments compared to $12.7 million at Oct. 31, 2006.
Click here to view Chartwell's Q1 results.
Leisure & Gaming (L&G) on Thursday released full year results, which show 247 percent growth in turnover to $116 million for its Betshop subsidiary. The company also reported 200 percent growth in active customers, up to 44,750, against the previous year, though it did retain a $104.5 million loss following the sale of its U.S.-facing operation in October. "Disposing of our U.S.-facing assets dramatically impacted our business, but having successfully restructured our operations we are now well-positioned to capitalize on growth opportunities throughout Europe," said L&G CEO Henry Birch.
Click here to view Leisure & Gaming's full year results.