E Online Gaming Can Help Companies Leverage New UK Tax Rates

In the most recent results, one of the leading booking and slot machines companies, William Hill Plc, posted an effective tax rate of about 13.2% or GBP 32.4 million of pretax income.

The new taxation laws for gaming companies took effect in the last fiscal year with gambling companies now expected to pay 15% tax on income generated from their gaming activities in the UK as compared to 1%, which they used to pay in their registered countries like Gibraltar prior to the new laws.

For William Hill, the effective tax rate of 13.2% includes a deferred tax credit of GBP 12.2 million following the new corporate tax rate cuts that will see companies pay 18% by the year 2020 from the current 20%. The new rate cuts will kick in during the fiscal year 2017 when the rate will be cut to 19% for general corporations.

Despite these tax rate cuts, William Hill and counterparts will still be paying a lot more in taxes compared to what the company used to pay a few years ago. As such, it would be ideal to find the means of leveraging the increase in taxes by cutting costs in other areas of the business to maintain a sustainable bottom line.

One of the most effective ways of doing this would be to replace some of the underperforming physical machine slots with online slots. By closing a few locations in place of online slots can help the company save a lot in the form of running costs and wages, among others. Several gaming companies like these ones highlighted here have launched various online slots and games, and this outlines the trend in the sector.

Online gambling has been one of the promising aspects of the gambling industry and although some countries like the US remain strict and prohibitive of the activity, it looks as though this is the future of gaming.

William Hill has certainly been one of the leading companies in online gambling in Europe especially when it comes to sports betting and other booking activities, but there is still a lot of room to improve in this space. From an investing perspective, William Hill offers stability and immense potential for growth.