Betfred’s FOBT tax victory could have serious online blowback

UK bookmakers Betfred have won a court fight with the local taxman that could inadvertently bring new limits on online casino play.

This week, a first-tier tribunal ruled in favor of Betfred’s claim that the value added tax (VAT) applied to revenue derived from the fixed-odds betting terminals (FOBTs) in the company’s betting shops had breached the concept of ‘fiscal neutrality,’ in that similar products in casinos (both land-based and online) weren’t subject to the same tax.

The tribunal declared that slots games “all met the same need from the point of view of the customer,” regardless of whether they were based on an FOBT or some other delivery mechanism. The tribunal applied the same reasoning toward roulette, card games and virtual racing games.

HM Revenue & Customs (HMRC) had applied the VAT to Betfred’s FOBT revenue between December 2005 and January 2013, after which the government introduced its 20% Machine Games Duty, which was hiked to 25% in 2014.

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