Online Gambling Tax Increase Becoming a Global Trend
Lately there is an increased number of news popping from around the world, announcing certain online gambling tax changes. After the wave of stats and predictions of global online gambling market constant rise, it seems that governments saw an opportunity to fix their budgets. Latest changes related to tax increase in the gambling and betting industry come from Mexico, Greece, Italy, and Kenya. And they are pretty disheartening for both online gambling operators and players.
Mexico government plans to hike the online gambling tax to 20%
Mexico’s online gambling licensees are going to face increased taxes after the government proposed bringing their operations under the same tax regime as land-based casinos. Local media reported that a member of the Morena party that controls Mexico’s Chamber of Deputies, Emmanuel Reyes Carmona, had proposed applying the country’s excise tax (Impuesto Especial Sobre Producción y Servicios or IEPS) to its online gambling operators at a rate of 20%.
However, this is not coming as a shock since Morena announced plans for changes in March this year. The party explained that the country’s 72-year-old gambling laws have to face some changes. That is, to include online-specific regulations to both combat unauthorized operators and enhance consumer protections.
Carmona’s complaints include facts that online gambling “grows more and more and there is still no concise regulation on the matter. There are still many tax loopholes” that local online casinos and sports betting sites enjoy. He said the current plan was to align online gambling tax with that applied to Mexico’s land-based gaming operators. These currently pay a 30% IEPS, so online gambling may actually catch a break here.
Also, in July, legal authorities from the Chamber’s opposition parties pushed the government to boost the IEPS rate on all gambling products to 35%. Now, individual Mexican states apply their own taxes on both gambling profits and punter’s winnings. So, various parliamentary committees will have to analyze the latest initiative from Carmona before federal legislators will get an opportunity to debate the matter.
Despite the uncertainty, Mexico’s online gambling market continues to attract some of the industry’s superstars. But, this online gambling market is considered to be seriously underpenetrated, partly because many local residents lack digital payment options.
Greece is changing online gambling laws again
On Thursday morning, the Ministry of Development and Investment of Greece issued a new, changed draft of its proposed online gambling laws. And potential licensees may not like the outcome.
The latest draft proposes online sports betting licenses would cost 3 million euros, while other gaming platforms like online casinos and poker will face doubled license fees of 2 million euros. These licenses will be valid for seven-years. Upon renewal these fees will also apply, provided that licensees indicate their intention to renew at least one year in advance.
Licensees will still face the previously announced 35 percent online gambling tax on their gross gaming income. But, the new draft allows operators to subtract this tax before adding their corporate tax. Meaning, the corporate tax rate now extends to another one-third of the income of the companies. Operators also can’t subtract from their corporate tax responsibilities the value of their permit or any other charges.
Online licensees must operate using a .gr domain and their servers must be located in Greece. Also, the Hellenic Gaming Commission (HGC) must license access to these servers. Operators will also need to store their data for 10 years in case the HGC wants to take a closer look. Affiliate marketing partners of digital licensees will also be required to register with the HGC, at a cost of 1k euros. Online operators are forbidden from carrying out Greek-facing promotions with any non-official list affiliate.
Now, we’ll wait and see whether or not the new plans of Greece will be subject to further modifications before implementation, or whether they will be enforced at all. Greece has previously vowed to give its online gambling industry an overhaul, but without success. However, the new government elected this summer has proven more competent on the gaming file than previous governments.
Italy increases online gambling tax for winnings to boost 2020 budget
Italy’s government could introduce a big tax on winnings from lottery games, as multiple Italian news outlets reported after the issue of next year’s budget draft. As proposed by Italian lawmakers, winners of lottery jackpots exceeding 100 million euros will be required to pay a 23% tax on their winnings, up from the current 12%.
These news emerged shortly after an anonymous Italian claimed a 209 million euros jackpot after correctly picking all six numbers in SuperEnalotto, a locally popular lottery game organized by major Italian gambling operator Sisal. Now, if the proposed 23% online gambling tax rate was in force, the fortunate player would have to give away 48 million euros of the total amount they won. Luckily, with the current 12% tax on winnings the lottery winner will have to pay a little over half that amount in the form of taxes.
As from January online casino operators are required to pay a 25% tax on gross gambling revenue, up from 20%. Online sports betting operators are required to pay a 24% on revenue, up from 22%. Retail betting operators are taxed at 20% on revenue, up two percentage points. The new tax regime is expected to generate an additional 80 million euros in gambling taxes.
Forthcoming tax on smaller lottery winnings, too
Aside from the increased tax on big lottery wins, local media reports suggest that a tax on smaller wins may also come into play. At the moment winnings of under 500 euros are exempt from any taxes. However, the Italian government is reportedly mulling the implementation of a 12% tax on winnings of under €500, which currently represent the majority of lottery winnings. If implemented, the new online gambling tax would apply not only to lottery wins, but also to other types of winnings, such as sports bets.
The government’s plan involves a progressively growing rate on gambling winnings that will increase along with the value of those winnings until it reaches the absolute maximum of 23%. Reports of the new tax on smaller winnings have already prompted backlash. Critics are arguing that this move would result in a decrease in the lottery’s annual profits.
Kenyan betting firm halts operations due to tax hike
Reuters reports that Kenyan online betting firm SportPesa halts operations due to a drastic hike in taxes on betting stakes.
Online sports betting companies such as SportPesa have grown rapidly in the East African nation in recent years, riding a wave of enthusiasm for sports. The government says the gaming industry achieved a combined revenue of 204 billion shillings (£1.63 billion) last year. That sparked government concern about the social impact of betting, and in May Kenya introduced new gambling regulations, including a ban on advertising outdoors and on social media.
Parliament voted an amended proposal raising the excise duty proposed in the 2019/20 (July-June) budget on the amount wagered at the time a bet is placed on all betting platforms to 20% from an initial 10%. SportPesa said it was “disappointed” by this move and that it would stop its operations until they see a return of “non-hostile regulatory environment”.
Newspapers Daily Nation and Standard reported that a second firm, Betin Kenya, had also ended its operations, citing the heavy taxation as the main reason. Also, SportPesa cancelled its sports sponsorships in Kenya last month.