|Thursday, August 31, 2006|
|New betting tax in Hong Kong to enter into force|
A new Gambling Act will enter into force on 1 September and will introduce a tax system based upon gross profits after dividends and rebates rather than betting volume.
The duty is being set at 72.5 percent for the first HK$11 billion (US$1.4 billion) in gross profit, increasing by steps of 0.5 percentage points for every subsequent HK$1 billion until the 75 percent that will also apply to the remainder exceeding the HK$15 billion (US$1.9 billion) tier. Allocation for pool dividends would remain unchanged.
The new tax system is designed to undermine the local illegal betting market which is an estimated HK$ 50 to 60 million (between US$6.5 and 8 million). It has been proved in many countries in the world that high fixed government take outs from betting volume lead to the development of illegal bookmaking.
The Hong Kong Jockey Club (THKJC) has also introduced a 10% cash rebate on the total losing bets per ticket when the losing sum is HK$10,000 (US$1,300) or more. It is a rebate similar to the ones given by illegal bookmakers and THCJC hopes to recapture an immediate 20% of the illegal betting market by this measure alone.