|US casino companies are cautioning the UK government against imposing tax rates of over 20% on gaming profits, threatening that if the taxes are too heavy, they will not invest in the soon to be deregulated gaming industry. Las Vegas companies like Harrah's and MGM Mirage will not build the large casino complexes which form part of the UK’s gambling reforms, unless gaming duty is cut substantially. Lloyd Nathan, managing director of MGM Mirage Development, Europe, said: 'The current tax rate would be prohibitive to the type of large scale development that the government is looking towards.' |
The deregulation plans were announced in a draft Bill recently, and they allow for unlimited slots in large casinos and fewer planning restrictions for casino developers. Casinos will also be able to offer other types of gambling such as fixed odds betting and bingo. Large casinos pay 40 per cent tax at the moment, although smaller casinos pay less depending on how much profit they make.
One executive of a big UK-owned casino company said: 'The American operators will not make investments in large resort casinos if the gross profit tax is above 20 per cent. That is what they are looking for.'
MGM, owner of the Bellagio and MGM Grand in Las Vegas, recently signed a casino development deal as a joint venture with Newcastle United football club but the deal is conditional on lower taxes.'If you look at other jurisdictions you will see a direct relationship between a low and stable taxation rate and resultant high investment. The higher the tax the lower the lower the investment,' Nathan said.
Recent UK economic research conducted by Pion Economics and Professor Neville Topham said the reforms could generate 117,000 new jobs, increase public finance contributions by £3.1 billion ($) a year and attract £5 billion ($) of inward investment. This, however, is based on a gaming industry tax rate of 15 per cent, similar to the gross profits tax paid by betting shops.
The report said: 'We have adopted this rate primarily in the light of feedback from overseas operators who indicated that a rate of this nature will not act to deter inward investment into the UK.' It is believed that US casinos would be willing to accept 20 per cent in negotiations with government.