The introduction of the new limit on FOBTs last year sparked a lot of controversy. We covered the topic on multiple occasions. The £2 stake limit was introduced on April 1 2019. Many operators complained that the new limit will make them lose a lot more of their revenue.
Later that year, in July 2019 it was reported that many betting shops were closed, and operators blamed the FOBTs decision. William Hill announced that it will close 700 shops, whereas the number of Ladbrokes shops that were about to close was 900.
This was the main issue that has been discussed regarding FOBTs and the most discussed one, but there is another issue that has been of great interest to operators, particularly two of them – William Hill and GVC.
William Hill’s shares risen by about 6%
Namely, it has been reported that William Hill and GVC Holdings are hoping to claim £350 million from Revenue and Customs after it has been found that operators have paid excess of £1 billion on fixed-odds betting terminals (FOTBs).
A tribunal has ruled last month that gambling companies have paid more VAT for the past eight years. It is almost certain that the operators will get their funds back as it has been reported that the HMRC has already stated that it will not appeal the ruling.
So, William Hill is likely to submit a claim for a rebate that will be in an amount between £125 million and £150 million.
The company has issued a statement stating that they will discuss the matter with Revenue and Customs to establish the amount that will be paid to the company and how will this process go.
The company’s share value has already risen by almost 6%, as it is expected the company’s funds and thus profit is about to be increased.
GVC Holdings, a company that owns Ladbrokes Coral has not released a statement on the matter, but this company is also expected to receive about £200 million. Ladbrokes’ share price has already grown by 2%.
Multiple operators have been overcharged
The first two companies that brought the attention to the matter were Betfred and Mecca Bingo, i.e. its owner Rank and the case brought against the Revenue and Customs regarding VAT payments in the period 2005 – 2013.
It has been found that HMRC should not have been charging gambling operators VAT in the amount that it did, as FOBTs are a lot more similar to devices such as roulette wheels which are, in fact, exempt from sales tax.
These companies will certainly not be the only ones that will be making claims for millions in returns, although there are certain worries whether the Government will be able to find the required funds, having in mind the Covid-19 response.
William Hill has already stated that the figures as estimated by the company and the findings of the HMRC are similar. The company expects a significant cash injection.
The limit on FOBTs as determined last year will surely remain in power, so the operators will not be in a position to gain as much revenue as they did in the past.