Betting tax to be removed - what is it and what does it mean for the country and its players?
Betting taxes have been around for a number of years and are essentially any winnings that you make from things such as wagers you'll be taxed on. This understandably has caused concern between different countries as there have always been ongoing debates as to if they're a good or bad thing to have in place. There are ups and downs to both sides of the argument, such as the tax goes towards national services and running the country, however the player can feel hard done to as a large portion of the funds they won would be lost to tax.
In this article we'll take a look into this in more detail and try to understand just why it's so controversial and why in some places it's still required.
Why is it so controversial?
1. Effects on the provider
If the country they're based in requires betting taxes, this will mean reduced profits and lower profits meaning they could struggle to remain competitive against other companies. Lower profits could also result in job losses and in some cases could result in the companies closing permanently.
Companies could also be hit with further costs if they fail to hit certain financial figures and don't manage to reach regulations which could cause further financial stress on the company.
If companies and players are required to pay tax on their winnings, this could turn them to play their games in either offshore or even black-market sites which would mean further losses for the company as they'd now be losing players entirely instead of just the tax. Not only would this affect the companies, but also the governments too as they wouldn't be receiving payments from the tax payments.
An example of this would be currently in Ghana players have to pay a betting tax whilst players in Canada don't. If you were to win a jackpot on one of the best fast payout casinos in Canada, otherwise known as an instant casino, you wouldn't pay any tax and would have the full amount within a few hours in some cases. This means someone playing in Ghana will receive less than a player in Canada, despite placing the same bet.
This could have a knock on effect, the player in Ghana may choose to try to access the Canadian website and play through them as they wouldn't be struck with the same tax as the Ghanaian website. As mentioned above this would then mean the Ghanaian website would be losing out on revenue all together as they'd be losing the customer entirely.
2. Effects on the player
For the player, it has more of an effect than just the player having to pay the tax, as most websites will adjust their winnings to compensate for the tax, meaning they may take home even less than someone playing in a country that doesn't have to pay the tax. Seeing this, it could make the player have second thoughts about playing all together which would mean that money isn't going into the economy at all as they've decided not to play.
3. Differences between winnings
For a player that wins on a betting site, they'll need to pay tax on that, however if that same player won a lottery or made a profit on the stock market potentially may be tax free, this raises concerns on how fair the rules are for the players and if it should be either one rule that everyone pays the tax or no one pays the tax.
One positive point for the players would be if the companies were paying tax, then you would be more confident you're using a legitimate website and one that's being regulated, however if the tax rule was lifted, this could cause risk of websites being unregulated and therefore more unsafe for the players.
4. Choice
If a player knows they have to pay tax on one thing but not another, then they may be more inclined to go with the tax-free option despite it not being their first option. This then means the players' options may be limited and they've got less choice as they may feel like they've got no choice other than to go with the tax-free option as they're losing out if they don't.
Betting tax has both positives and negatives and seen to both be good and bad depending on your viewpoint. For the players, whilst they will earn less money whilst playing, it does give the security of the website being genuine as they're more regulated as they're having to pay tax.
For the businesses, they risk losing out on players as they may choose to go elsewhere to black market websites to try and not pay tax, whilst some players might stop playing all together. This means a loss of revenue and potentially even the risk of closing.