Explanatory note

This Order, which comes into force on 1st November 2006, updates the definition of a gaming machine in section 23 of the Value Added Tax Act 1994. Section 23 restricts the amount upon which VAT is charged to the net takings after deduction of any winnings paid out by the machine.

Article 2 of this Order substitutes a new definition of gambling. The first element of the existing definition (gaming) refers to section 6 of the Gambling Act 2005. This is replaced by a definition that refers to a “game of chance”. There is a new definition of a game of chance, as well as of playing a game of chance. The existing definition of game of chance refers to the Gaming Act 1968 definition, which is to be repealed by appointed day order made under the Gambling Act 2005.

Only games of chance played for a prize are within the definition of gambling. Free plays are not prizes for this purpose.

The other element of the existing definition of gambling (betting) is no longer defined.

The above changes mirror amendments made to the exemption from VAT of betting, gaming and lotteries by the Value Added Tax (Betting, Gaming and Lotteries) Order 2006.

A full regulatory impact assessment has not been produced for this instrument as it has negligible impact on the costs of business, charities or voluntary bodies.