Bookies face a £50m hit from duty on machines

The leisure and gaming industries were spitting tax yesterday as they faced a hit of up to £50m from the new Machine Games Duty which will affect all fixed-odds betting terminals as well as fruit machines and other gaming terminals.

Analysts estimated that Britain's biggest bookies, Ladbrokes and William Hill, will each face a bill of up to £13m from the 20 per cent charge, equating to a 5 per cent reduction in their annual profits.

Ladbrokes' head of communications, Ciaran O'Brien, said the measure would "cost the industry more than Red Rum ever did. We can only hope for some deregulation to sugar this pill".

A lower rate of 5 per cent will be charged on machines paying smaller prizes but even this will cause unhappiness in the embattled pub trade.

The move could also contribute to a long predicted bonfire of the betting shops.

Betting companies were also told that the Government will respond to the flight offshore of "remote" gaming operations – telephone and internet betting – by changing the way the 15 per cent levy on gaming operators' gross profits is charged.

The levy was brought in to replace betting duty imposed on punters when they either placed a bet or picked up winnings. But with 90 per cent of the industry offshore, the levy will in future be based upon where a punter places a bet rather than where the bookie is located. Legislation may not come in until late in 2013 or early in 2014.