Cash Grab!This was published 26-06-2009
Recently the political system in the UK has been going through a crisis of confidence. This has been driven by insane spending by members of parliament, including ministers using their expense accounts to refurbish a private residence, pay off their mortgage and other items that regular expense account definately do not cover.
It seems that in a bid to recoup some of the excess the government is rolling out a new taxation system for poker that could jeopardize many poker rooms all across the UK. In the old system a poker room would have to pay VAT, or essentially 15% on earnings from poker. This left room for a modest profit for the casino. The new system is based on a sliding scale of charges. The minimum being 15% and it goes to a maximum of 50%. That means that the more money taken in by a given casino in a poker room, the more they have to pay in taxes for that room. The tax doesn’t take into consideration operating costs so clubs that fall into the top bracket have to pay 50 percent of their poker revenues in taxes, then pay all their staff, rent and running costs out of the remaining 50 percent.
It is being speculated that because the cost of going to a “legal” poker room could go up (in fees to help reduce the impact of the high tax), and the fact that police are lax is clamping down on illegal poker venues, players will start to choose the illegal venue option first. It avoids the high cost and seems fairly low risk.
The laughable par about all this is that the Junior Minister at the treasure that is responsible for the legislation was not fully aware of the way player to player poker operates, and now that things are moving on the legislation, is unable to inform his superiors about his mistake.
Martin Ramskill, General Manager of the Grosvenor Victoria casino commented on the situation by saying, “The government appears to have misunderstood the effect of its actions as it said it wanted the budget to be tax neutral. By taking away the VAT rate and introducing normal gaming duty to poker rooms, it could mean that charges might now need to be raised to try and cover the extra costs. This may well have the effect of driving poker players to illegal card rooms that don’t pay taxes and may even create a demand for such venues, which runs counter to its stated aim of keeping criminality out of gaming.”