Casino group Rank counts the cost of chancellor's tax hikes
Posted by Epiphany Solutions on 27 Apr 2009 at 15:04
Gaming group Rank is counting the cost of the budget after the chancellor upped taxes on the profits of a number of gambling formats.
On Thursday morning the firm's shares slid by 14 per cent following the announcements by the chancellor, according to the Financial Times.
The bingo and casino firm's share prices stood at 69 3/4p by the end of that day.
Gaming groups had called for VAT on bingo to be scrapped to help the sector, and this was approved.
But the government also increased duty on bingo from 15 per cent to 22 per cent, meaning it is now the highest taxed betting and gaming format.
Elsewhere gaming executives were also left counting the cost of a nine per cent rise in duty on gaming machines, which are often an important part of revenue at bingo clubs as well as casinos.
Furthermore there was a hike in duty on poker and card games played in casino rooms.
Rank officials said that meant poker rooms could incur £2.7 million in tax in 12 months. The Times reported that rank added it would be hit to the tune of £6 million this year, and £9 million a year thereafter, but also said its banking covenants were unaffected.
According to the paper, after the announcement Ian Burke, chief executive of the group, wrote to chancellor Alistair Darling, saying he had launched a "damaging and unwarranted attack" on more social forms of gaming.
Experts reacted to the developments by saying the chancellor could be exacting a form of revenge on the company's success in VAT claims, and according to one expert quoted by the Times, the nonpayment of VAT on interval bingo.
The paper also published updated trading figures for Rank, which showed a one per cent fall in like-for-like sales over the last four months.
Elsewhere, customer spending in the Mecca bingo range of clubs had increased five per cent, but visits to the chain are down by the same amount. Visits to the firm's Grosvenor Casino outlets are up, by three per cent, although spending at them is down by two per cent.
