UK Poker Tax May Force Poker Rooms to Close

The political system in the UK is currently facing one of its biggest crises of confidence in living memory, due to an ongoing series of scandals regarding expense claims by members of parliament. These have included senior ministers paying off their mortgages, refurbishing private residences, and in one instance building a moat using taxpayer's money.

Amid this bad publicity, a new tax regime for casinos was introduced in late April, which may result in the closure of the country's most successful poker rooms. This tax was designed to bring the levy on earnings from casinos' poker rooms in line with the duty charged on the main gaming floor.

Casinos previously had to pay VAT on poker room earnings, which amounted to a 15 percent charge on earnings from poker games, and was fair and workable for casinos wishing to operate poker rooms at modest profit levels. The new tax is based on a sliding scale of charges, with a minimum of 15 percent charged for casinos with low turnover, up to 50 percent for the largest venues. The tax combines casino drop with poker rooms' earnings into one single figure for the purposes of calculating the tax due. Effectively, almost all casinos in London will be coming in at the top rate of 50 percent while most of the provincial casinos in the rest of the country will not be so badly affected.

It was speculated that the junior minister at the Treasury responsible for this legislation was not fully aware of the way in which player-to-player poker operates. However, it is also conjectured that he will be unlikely to highlight his mistake to his more senior colleagues. The tax is levied before any costs are taken into consideration. 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.

The clubs most affected by the new tax include the Grosvenor Victoria Casino in London and Nottingham's Dusk Till Dawn Poker Club. Both fall under the jurisdiction of the UK Gaming Commission. Ironically, the abundance of illegal venues, which the authorities have failed to clamp down upon, will not have to pay a penny because they do not fall under the same tax regime imposed upon casinos.

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."

While the Victoria club intends to keep its doors open to poker players, speculation is rife that Nottingham's Dusk Till Dawn club may have to take even more drastic action and go into enforced closure. The club's owner Rob Yong recently commented on the situation, saying, "The medium and long term future of Dusk Till Dawn is now in question. One option is shutting the doors, as it would be far cheaper to do this and pay the lease for the remainder of our 15 years, than keep the place open."

Jonathan Raab is a poker consultant and tournament reporter. He also represents online poker site Blue Square at live poker events in the UK and Europe, and manages the GUKPT. Email Jonathan at jr@bluesq.com.