2009 was a big year for local bingo in the financial news. It involved a very public spat between offline bingo operators and the taxman. Despite being one of the softest forms of gaming available, many in the industry felt the offline bingo industry was being harshly singled out, with a rise in bingo duty to 22% in contrast to the 15% being paid by other industries, including the online bingo world.
The argument went that offline bingo was suffering already with dwindling player numbers as the recession bit and players opted to stay in. The tax rises on bingo profits would mean that an already ailing industry would be left crippled, with hundreds more club closures and job losses predicted. Politicians, operators and players began a high profile campaign, which ended in success in the closing months of 2009 with a pre budget announcement that duty would be dropped to 20%
And the year ended on an even better note, when the taxman admitted VAT exemption on all offline bingo games, leaving bingo giants like Mecca Bingo and Gala Bingo able to potentially claw back millions in overpaid tax through high profile claims. For the ailing Gala Bingo land based bingo operation, whose debt reached the millions last year, the move will no doubt be a relief as many operators seek cash from any means possible in order to navigate the ongoing financial storm.
But there could yet be a sting in the tail. With a high profile appeal between Her Majesty’s Revenue and Customs and the Rank Group (who operate Mecca Bingo) set for April 2010, a ruling in this case could mean these profits would have to go back HMRC’s appeal set for the courts next April, the taxman has warned VAT claimants that its successful appeal would require their repayment with interest.
But rather than hedge their bets on the offline world, it seems likely for online bingo fans that traditional land based operators like Mecca Bingo and Gala Bingo will be focusing their energies on the world of online bingo. Because the online bingo world only has to pay 15% duty, it is free to reap profits at a higher rate.
Take Gala Bingo as an example. In contrast to the debt woes of the GalaCoral Groups offline operations, it’s Gala Bingo site currently holds 15% market share of the online bingo market. And this was certainly shown in its recent winners list, including one lucky winner who snatched nearly £85K on one instant win game. With a £20 free play offer, the Gala Bingo online bingo site clearly seems to be winning big compared to its offline cousin
So whether it’s kiss and make up or whether the battle for tax gets even uglier, it seems that many are looking to online bingo as backup – and this can surely be no bad thing for any fans of online bingo.
