Background
Jumpman operated online games of chance and offered new customers a “Welcome Offer”: after opening an account and making a qualifying deposit, a customer received a free spin of its Mega Reel game. The Mega Reel could award prizes including free spins on other games. HMRC assessed approximately £13.2 million in Remote Gaming Duty (RGD) for periods from July 2018 to December 2022 in relation to those arrangements.
The First-tier Tribunal dismissed Jumpman’s appeal. It held that the Welcome Mega Reel spin was a wholly free game, rather than participation in a game for which a gaming payment had been waived, so it fell outside section 159(4) of the Finance Act 2014. But it also held that the further free spins won on the Mega Reel did not qualify for the exclusion in sections 159A(4) and (5), and were therefore deemed gaming payments.
The Court’s Holding
The Upper Tribunal dismissed Jumpman’s challenge to the First-tier Tribunal’s treatment of the Welcome Mega Reel spin. The First-tier Tribunal had been entitled on the evidence to find that the displayed spin value and internal accounting entries did not show that a customer had been relieved of a payment otherwise required to play. That part of the decision, and the conclusion that the Welcome spin itself created no RGD liability, remained intact.
However, the Upper Tribunal allowed the appeal on the treatment of the further free spins. It held that “the gaming” in section 159A(4)(b) refers to the remote gaming identified in that subsection generally, not only to earlier gaming undertaken under a waived-payment offer. The further free spins had been won in the course of the customer’s Mega Reel participation and therefore fell within the statutory exclusion. The Tribunal set aside the First-tier Tribunal’s decision to that extent and reduced the assessments to nil.
Key Takeaways
- A genuinely free game does not necessarily involve a waived gaming payment for RGD purposes.
- Free spins won from earlier remote gaming can qualify for the section 159A(4)-(5) exclusion even if that earlier gaming was not itself played under a waived-payment offer.
- Consultation materials may be considered as legislative background when interpreting tax legislation, although they cannot override enacted text.
Why It Matters
The decision draws a significant boundary in the RGD treatment of promotional gaming. It prevents further free spins won from wholly free promotional gaming from being treated as taxable gaming payments merely because the initial promotional game did not fall within section 159(4).
For remote gaming operators, the case underscores the importance of the actual customer-facing terms and commercial operation of a promotion, while confirming that the statutory relief for later freeplay is not limited to chains beginning with an earlier deemed gaming payment.