Gambling Tax Around The World
The online gambling market was estimated to be worth $53.7 billion in 2019 and it is expected to grow at a steady rate for the near future. Today, there are tons of online casinos that allow players from all over the world to enjoy the thrill of gambling at any time and on any device of their choosing.
In 2017, Kenya raised its gambling taxes on casinos, gambling firms, and lotteries to 35 percent tax representing a huge leap from the previous held rate of 12 percent. On the plus side, the figure was still not as steep as the once-rumored 50 percent rate that was being considered. 'It is a soft tax system, but we do have a value added tax around 30% on luxury items such as jewelry or restaurants and all the best luxury people are here within a square mile.' Anyone who gambles in the USA is expected to record an itemized list of their wins and losses on their tax form each year and will be taxed 25% on winnings. The laws concerning gambling tax around the world aren’t all black and white. Around this time, online gambling was on the rise, and the UK government feared the UK gambling industry would suffer thanks to outside competition. Nowadays, the UK gambling industry it as strong as ever, so it seems like the changes in the tax system were a good move.
In numerous countries around the world, gamblers are taxed on their winnings, which may seem a little unfair considering the monetary risks that they undertake when gambling. While in most cases these taxes represent just a small amount of their winnings, spare a thought for casinos which end up paying huge rates of tax on their Gross Gaming Revenue (GGR).
Gambling Tax Around The World 2019
Each country collects its own GGR payments in a different way, but most commonly it is calculated as a percentage of the net profit that is made by the casino. This is one way that local communities, as well as a country’s economy as a whole, can get the most out of their regulated gambling, and in 2006, for instance, the USA collected a massive $90 billion in Gross Gaming Revenue.
What GGR Rate Makes Sense?
Finding what GGR level makes sense can be hard for governments, who clearly would like to derive the most monetary benefit from their regulated industries, but not in such a way that it might discourage new business from opening up in the country. In other words, there is a delicate balance that governments across the world need to strike in order not to sabotage their own self interest as far as gambling taxes are concerned.
Different Approaches
– Kenya
In 2017, Kenya raised its gambling taxes on casinos, gambling firms, and lotteries to 35 percent tax representing a huge leap from the previous held rate of 12 percent. On the plus side, the figure was still not as steep as the once-rumored 50 percent rate that was being considered. In the meantime, the government defended its decision by stating that it wanted to use some of the money to help young people in Kenya to pursue career choices that did not involve gambling.
– Cambodia
By contrast, Cambodia has encouraged new businesses to invest in the country’s gambling industry by lowering the tax rate to one of the most competitive on the planet. This has meant reducing it to below that of even Singapore, which boasts a 10 percent rate, and moreover, Cambodia’s decision seems to have already born fruit and had a positive impact on its financial numbers. From 2015 to 2016 period, for instance, the budding gambling country witnessed a 38 percent increase in the revenue it generated from gambling, with growth expected to continue at an equally impressive rate.
Gambling Tax Around The World Per
Though the two tax rates mentioned may seem extreme, they are by no means the highest or lowest examples within the industry.
Gambling Tax Around The World 2020
Highest Gambling Tax Rates
Here’s a look at the top 10 countries charging the highest gambling tax rates, with the figures mentioned being the upper case amounts possible:
Germany (90%)
France (80%)
Austria (80%)
Luxembourg (80%)
Denmark (75%)
Poland (50%)
UK (50%)
Australia (45%)
Macau (39%)
Kenya (35%)
Lowest Gambling Tax Rates
Russia (0%)
Italy (0%)
Cambodia (2%)
Belgium (2.5%)
Czechia (6%)
US (6.75-8%)
South Africa (9.6%)
Finland (12%)
Singapore (5-15%)
Portugal (15%)
Argentina (16%)
The Right Balance
Finding just the right tax rate to encourage a beneficial arrangement between the government and the gambling businesses that operate within the country might seem like a challenging task, but as can be seen from the above figures, there are many ways to approach the situation.
New Jersey versus Surrounding States
One of the biggest contrasts between different gambling taxes levied in the US is provided by New Jersey and its neighboring states. Casinos located in Atlantic City pay a tax of just 8 percent on their GGR, plus a further 1.25 percent which goes towards community investment funding projects. In comparison, Pennsylvania slot machine are taxed at a rate of 55 percent, and its table games at 16 percent; Maryland’s table games are taxed at 20 percent tax, and its video lottery terminals at between 50-61 percent; while in New York casino tax rates fall into the 31 to 41 percent range.
As a result, New Jersey’s 7 casinos paid $237 million in casino gambling taxes last year. Meanwhile, Pennsylvania’s 12 casinos forked out $1.379 billion in taxes, New York’s 9 casinos spent around $888 million, and Maryland’s 5 gambling venues were charged $452.9 million in taxes. Commenting on the approach taken by New Jersey, Spectrum Gaming Group analyst Michael Pollock, explained: “I think it’s right with a single-digit tax rate. It’s an enormous competitive advantage to the state to both existing and potential properties.”
Nevertheless, the incredibly low tax rate in New Jersey has still attracted criticism from certain quarters, with Assemblyman Chris Brown (R-Atlantic) suggesting that taxes should be raised in order to ensure “an additional, unfair tax burden” is not placed upon working families in the state.
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Whenever anyone makes money, the government is going to levy a tax, and gambling is no exception. Gambling tax is handled differently around the world. Some countries offer more favourable terms for the players whereas others offer better terms for the operators. Some countries even offer beneficial terms for both.
The UK gambling tax
The gambling tax in the UK is a prime example of a tax which favours the players. Whenever you gamble in the UK, you don’t have to pay the government a penny.
But this wasn’t always the case. Players used to have a tax levied on either their winnings or on their initial stake. This all changed in 2002 when the tax on players was completely removed to ensure the UK remained competitive.
Around this time, online gambling was on the rise, and the UK government feared the UK gambling industry would suffer thanks to outside competition. Nowadays, the UK gambling industry it as strong as ever, so it seems like the changes in the tax system were a good move.
The UK gambling laws are so favourable to players that you don’t even need to report your earnings to the government even if you are a professional gambler. So if you are lucky enough to make a living from playing Blackjack or Poker, you don’t need to pay any tax to the government from your profession.
Other countries with tax-free gambling
The UK isn’t the only country that has such a favourable taxation system for players. Whenever you gamble in the following countries, you don’t need to pay anything in taxes, on either your winnings or your initial stake:
- Canada
- Germany
- Austria
- Belgium
- Bulgaria
- Australia
- Denmark
- Italy
- Sweden
- Malta
Whenever you gamble in the following countries, you don’t need to worry about declaring your winnings. If you are lucky enough to win, you get to keep the whole amount!
So who gets taxed?
The gambling industry is huge, so naturally, the government wants to get a slice of the action. In the above countries, the government taxes the operators rather than the players.
In some cases, these taxes can be quite high. In the UK, for example, operators have to pay a 15% tax on their profits. On the other hand, other countries, such as Malta, have an extremely low tax on the operators. This is done in order to encourage casino operators to open up for business in Malta.
What are tax havens?
With certain countries taxing casino operators at such high rates, it’s no wonder they have tried to find ways to circumvent it. One popular method of paying less tax is to operate out of a “tax haven” country.
This is a big reason that you see certain locations popping up so often in the online gambling world. For example, many operators have their headquarters based in Malta or Gibraltar.
Tax haven crackdown
Naturally, governments don’t take kindly to businesses circumventing their tax rates, so it’s not a surprise many countries have implemented measures to stop tax havens. The UK, for instance, has implemented a Point of Consumption Tax. This tax means a company is subject to the tax rate according to where the player is accessing the online casino from. This means if you have a UK-based player, you need to pay the UK tax rate.
Countries that tax players
In many other countries around the world, a tax is levied on players. Generally, this makes things a lot more complicated. Sometimes, certain kinds of gambling are subject to a higher rate than others.
In the USA, for instance, you may need to fill out forms to declare your gambling winnings to the government. Of course, this kind of system is a bit less friendly towards the players, but it does have a silver lining. In the USA, you can also report on your gambling losses, which may entitle you to certain tax breaks.
Do your research
Residents of countries that don’t tax players at all (such as the UK) often get caught off guard when they go abroad and visit a casino. If you are planning on visiting a foreign country and spending some time gaming, make sure you do some research about the local gambling laws. If you don’t do your research, you could inadvertently find yourself in violation of the law.
Otherwise, stick to playing on online casinos in the UK to avoid such troubles. CasinoGuide has all the information you need to pick the right casino for you.