Free play is simple to understand - you get the chance to play games by the casino for free, no money involved. For now, gambling operators are not required to pay taxes on wagers/bets placed by customers who are availing their free play offers.
In the UK, free play offered at online poker sites, online casino sites, and even sports betting websites could very well be a thing of the past, and these gambling sites may have to find other ways of attracting and retaining customers.
The non-ministerial department of the UK Government Her Majesty's Revenue & Customs (HRMC), which is the British equivalent of the Internal Revenue Service (IRS), have proposed a new bill for next year called the 2017 Finance Bill, stating that online gaming companies shall be required to pay taxes on bets placed by customers who are betting for free. This means that the gambling operators shall have to pay the same amount of tax on any given bet as if the customer had placed the bet with their own money.
According to HMRC, this should generate about $50 million extra in revenue over the upcoming 2017-2018 tax year, revenue that would otherwise be lost.
This will be implemented starting on August 1, 2017.
Here is the statement from HMRC about the bill, "This will ensure where a customer makes use of an offer that allows them to gamble for free, or at a reduced rate, the operator will, in certain circumstances, be required to account for duty on the amount that the consumer would have paid without the offer. The definition of ‘prizes' will also be amended to ensure that operators cannot use the value of freeplays given as prizes to reduce their dutiable profit. These changes will have effect for accounting periods that begin on or after 1 August 2017."
This move will most likely not be good for the gaming operators, so it will be expected that the result is that online poker sites, online casino sites, and sports betting sites will cease to offer free play to their customers.
This regulation will not only apply to online operators within the UK, but also offshore websites who are licensed to operate within the UK.