Ladbrokes and William Hill Shares Recover After UK Budget
The latest UK budget has been published by the Chancellor of the Exchequer, George Osborne, and it has ended speculation in the gambling industry over additional new taxes being introduced. It had been thought by many financial commentators that the Chancellor was planning to impose new gambling taxes on UK bookmaking companies this year.
The 2016 Economic Budget was delivered last Wednesday and it made no mention of new gambling taxes, but in the lead up to the announcement there has been a drop in share value in both Ladbrokes and William Hill, two of the UK’s largest and most successful companies. It had been thought that UK bookmakers would be targeted by the government as part of the their increasing crackdown on so called “sin industries”. The tobacco industry, for example, took the biggest hit with duty increasing now to 2% above inflation on cigarettes.
The British Chancellor, delivered the 2016 Budget on Wednesday and his announcement allayed the fears of some of the United Kingdom’s biggest bookmakers that he was going to impose stringent new gambling taxes on them, with the focus being on gaming machines. Shares in Ladbrokes fell 5% by last Monday, and similar shares in William Hill fell by over 2%, as a consequence of the increasing speculation that George Osbourne was planning to increase duties on Fixed Odds Betting Terminals (a type of electronic gaming machine on which players may bet on the outcome of various simulated games and events, with the odds offered being fixed from game to game) but this ended up not being the case. Instead, these free bets will be taxed from the 1st of August, 2017.
The official UK Budget document reads: “Remote gaming operators currently benefit from a more generous tax treatment when they offer discounted or free gambling (‘freeplays’) to customers in Remote Gaming Duty than would be the case for operators offering free bets on things like football and horse-racing. The government will therefore amend the tax treatment of freeplays in Remote Gaming Duty to bring it into line with the tax treatment of free bets in General Betting Duty.”
Now that the gambling industry has not been hit with the added taxation, shares in UK bookmakers are immediately beginning to recover to what they once were. Investors in both Ladbrokes and William Hill reacted positively to the Budget announcement, with the shares in Ladbrokes rising by almost 6% to 121.70p, and with shares in William Hill increasing by almost 4% to 379.60p. Paddy Power Betfair also saw increases of around 1% when the new budget was released.
