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British bingo operators have won some reprieve from planned tax increases, but venue closures are still feared. In April, the government had proposed to increase the gross profit tax from 15 percent to 22 percent – an unexpected move that led to a demonstration at the Houses of Parliament in London under the banner of the I’m Backing Bingo pressure group.
The bafflement of players and those within the industry alike was expressed by market researcher Research and Markets, which said: “The bingo community is at a loss to understand why the pursuit, which is seen as relatively ‘soft’ gambling with the majority of its players being women who place small bets, should be singled out for this tax hike, while other ‘hard’ gambling pursuits such as casinos are subject to 15 percent tax.”
Now, however, the government has climbed down slightly, and said it will cut the tax back to 20 percent in its next budget, expected in April. A further small victory for the sector was a government acknowledgment that it would not impose value added tax (VAT) on any bingo games, after a High Court decision that VAT had been improperly levied on interval games.
But many remain concerned that as many as 100 clubs could close, with the 20 percent tax – still a full third up on its previous level – eating further into margins that have already been damaged by the recession and Britain’s 2007 ban on smoking in most buildings open to the public.
At Rank, for example, revenue from the Mecca Bingo operation stayed at 2008 levels (when measured on a like-for-like basis) through 2009. Spend per visit was up but the number of customers shrank.
The firm expects to claw back some 2.5m Euro ($4m) annually thanks to the reduced 20 percent level of duty, but warned that “it only mitigates in part the negative impact of tax changes”.
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