Why are No-deposit Bonuses in Decline?

What are the New Tax Laws that are Threatening Bonuses

At the heart of this issue is the Finance Bill of 2017, which was conceived in Parliament and ultimately became effective on August 1st of last year. Its underlying aim was to effectively cap the proliferation of excessive bonus offers and promotions, which the UK Gambling Commission (UKGC) feared would pose an issue to vulnerable gamblers.
According to the terms of this bill, any free players or no-deposit wagers are now subject to taxation in line with the General Betting Duty. This means that operators are required to pay a type of consumption tax at the point of sale, in the form of a 15%, general duty on all complimentary or discounted online bets. At the same time, new regulations have amended the definition of ‘prizes’ to deter operators from equating the value of free plays with prizes offered, which has previously enabled some to reduce their bottom line, taxable profit.
This regulatory change has been in the pipe-line for a while now, with the Chancellor of Exchequer keen to close a longstanding loophole on all heavily discounted wagers and free plays. The result of this move is that the government is now able to optimise the taxable revenue derived from the online gambling market, while operators have been forced to reconsider their strategies for acquiring new customers and retaining existing ones.

How will this Impact No-deposit Bonuses in the UK?

More specifically, these radical tax reforms have forced operators to consider culling no-deposit bonus offers, despite their effectiveness at engaging and converting brand new customers.
To understand this further, we have to understand the impact of these tax changes in line with the prevailing climate. After all, operators are already struggling with the financial implications of an inflated point of consumption tax (POCT), and the threat of further liability is encouraging many to adopt a risk-averse approach.
Remember, it’s estimated that the industry has been hit by around £500 million in additional taxation levies in recent years. There’s also the promise of further changes in the year ahead, with Fixed Odds Betting Terminals (FOBTs) likely to see their maximum betting threshold of £100 reduced by more than half under the terms of new legislation. When combined, this equates to a significant drain on the gambling industry as a whole, with the online market particularly adversely affected.

The Last Word

There’s no doubt that no-deposit casino bonuses are likely to experience further decline in the months ahead, while some feel that the authorities may be going too far in their attempts to regulate the sector.
This is something that the government expressed concerns about before passing the Finance Bill, as they were worried that operators would simply tailor their promotions to pass additional costs on to the consumer (which is what will happen if no-deposit bonuses become a thing of the past).
Beyond this, there’s also a concern that UK-based gambling operators could consider relocating abroad, particular with the spectre of Brexit looming large. This would hit the economy hard in terms of tax revenues and job creation, meaning that customers may not be the only group that suffers as a result of new tax regulations in the online casino market.
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