Players Set to Feel the Pinch at Party Poker

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With the smattering of gambling site closures that took place over the last few months in the UK because of the introduction of the Point of Consumption Tax – one of the biggest upsets in poker in 2014 – British players have got used to the fact how a change in legislation can affect the way they game. It’ll come as no surprise, then, that players are about to start feeling the pinch of another law, this time one that applies all over Europe.

Legal Changes

Back at the start of January, the European Parliament’s new tax regime came into effect. The changes in law were targeted at the way VAT is applied to online and mobile casino, and in much the same way that the PoC Tax was aimed at keeping revenue in the UK, this new system is designed to give the countries where the players are using the sites a fairer deal with tax from foreign businesses.

The downside to the deal – which was worked out immediately, and caused much protestation – was that the changes meant that online and casino gambling operators were going to be charged tens of millions of pounds more every year in their VAT bill.

Like everything in capitalism, a company will be very reluctant to swallow losses like a huge VAT bill, and will inevitably pass the losses down to their customers. Unfortunately, when that company is an online or mobile poker operator, it means that you’re bound to see an increase in what is taken from pots in rake, and a decrease in the amount you can expect to see in guaranteed prize pots in tournaments.

PartyPoker Digital LogoIt doesn’t mean that the poker operators are bad, or that they want to put their players off – far from it – it’s simple business. Until now it’s all been pretty academic; that was until this week, when digital entertainment plc (who, as I’m sure you know, own and operate PartyPoker), released a statement demonstrating how the tax bill they’d be slapped with this year would mean a €15 million reduction in net revenue.

The biggest trouble PartyPoker will face is in Germany. Not only is that the biggest market the company is engaged in, it is also introducing one of the highest VAT rates, at about 19%. But it’s not just there that they’ll be paying more, as most EU members will be hiking their rates to take advantage of the law change.

How Will Players Suffer?

Proponent of the new laws have pointed out that it’s a little unfair that gambling has long be exempt from VAT, or enjoyed reduced rates, but opponents counter that it is not the executives of the gambling operators who will feel the pinch, but the players.

Head of Media Relations at digital entertainment, Jay Dossetter, made a statement about the company’s position on the expected tax bill, saying that the company would try and find other cost saving elsewhere, and that he hoped that they would not have to encroach on the player experience: “We don’t have any direct plans to in terms of that at the moment,”. Plans or otherwise, the realisation that you’re having tens of millions lifted directly out of your bank account is going to come as quite a shock, and I’m going to be thoroughly surprised if PartyPoker looks the same this time next year as it does right now.

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