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Government may increase tax on high payout slot machines
By Graham Clifford
Published on 1 August 2008

Bookmakers who use high payout slot machines may have to pay a higher tax after a gambling commission study found one in nine betting shop roulette players were classed as problem gamblers.

While other forms of revenue have been drying up for the likes of William Hill, the growth of slot machine use has been the industry’s saviour.

But now regulatory uncertainty around the controversial high-payout slot machines has continued to cloud the future prospects for gambling groups across the UK.

Britain's biggest bookmaker, William Hill, recorded a 5% rise in gross win, to £421m, in its 2,250 betting shops for the first six months of 2008. Strongest growth came from 8,520 touch-screen roulette machines, which increased their gross win (the sum lost by punters) by 10%.

A Gambling Commission study last year found that over 11% of roulette players were classed as problem gamblers. The sports minister, Gerry Sutcliffe, has written to the commission asking regulators to "prioritise" a further review of the social impact of these machines, though it is not expected to deliver its conclusions until next year.

New rules allowing betting shops to open to 9.30pm helped William Hill increase the average weekly revenue contribution of a roulette machine from £466 at the end of last year to £513. The company offered a number of "free bet" promotions to attract customers to use the machines. The William Hill finance director, Simon Lane, said, after adding back tax and royalties, Hill's average machine gross win figure was very similar to the £673 a week reported by rival Ladbrokes.

Nigel Parson, an analyst at Evolution Securities, said: "Machines were the growth driver but this is the concern - does government regulate them more to protect the user or does it tax them more to shore up its treasury income? Either outcome is unhelpful for the industry."

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