In the United Kingdom, land-based casino operator Hippodrome Casino Limited has been ordered to pay some £447,000 ($563,580) in tax after losing a High Court appeal brought by His Majesty’s Revenue and Customs (HMRC).

The firm behind London’s prestigious Hippodrome Casino won a First Tier ruling in March of 2022 to exclude it from having to pay up to 20% value-added tax (VAT) on complimentary food and drink given to its gamblers. This initial decision determined the casino operator was to be excused from such duties because it was simultaneously utilizing these same spaces within the exclusive Leicester Square property for the non-taxable supply of gaming entertainment.

Opening Assessment

In this initial ruling, the First Tier court determined Hippodrome Casino Limited’s means of assigning and collecting VAT on overhead disbursement with reference to floorspace between 2012 and 2018 had ‘more accurately reflected the economic use of that expenditure than the standard turnover-based method of recovery provided by Regulation 101 of the VAT Regulations 1995’. The two-judge body ruled the casino operator’s opt-out had additionally ‘provided a more fair, reasonable and precise proxy’ with regards to the ‘economic use of its residual costs than the standard method’.

Detrimental Determination

However, HMRC appealed with the Upper Tribunal Tax and Chancery having now found Hippodrome Casino Limited liable for the outstanding VAT bill due to the fact some of the areas in which Hippodrome Casino punters were consuming free food and drink were simultaneously being used by non-gamblers.

In their decision, High Court Judges Rupert Jones and Vinesh Mandalia ruled some 33% of the Hippodrome Casino’s floorspace was being utilized for ‘taxable businesses’ with the remainder being set aside either for staff or the provision of gambling entertainment. As such, they threw out the operator’s earlier ‘dual use’ defence even after determining approximately 70% of customers were visiting the property solely to gamble.

“Our finding of dual use includes a finding that there was significant economic use of the floorspace allocated to entertainment and hospitality (taxable supplies) also for gaming (non-taxable supplies) but not vice versa,” read the Judges’ ruling. “We did not find that there was significant economic use of the areas allocated to gaming also for the purpose of hospitality and entertainment.”

Capital Concern

Sitting only a stone’s throw away from London’s fashionable Soho district, the 75,000 sq ft Hippodrome Casino was acquired by Leicester-born father and son entrepreneurs Jimmy and Simon Thomas in 2009 after having fallen into disrepair. The seven-floor venue was subsequently renovated and today features a trio of gaming floors alongside a slots room, a poker deck, six bars, a steak restaurant, an indoor smoking terrace and a 180-seat cabaret theater.

Advantageous Association

Hippodrome Casino inked a two-year partnership with experienced gambling harm reduction firm Epic Risk management in August before embarking on a training program for every one of its customer-facing employees. This arrangement is now endeavoring to put safer gambling practices at the heart of all punter interactions through a series of workshops for the venue’s licensed and unlicensed staff.

“We are thrilled to partner with Epic Risk Management to help our employees build empathy and understanding through lived experience,” the Business Services Director for Hippodrome Casino, San Douglas, said. “The training it provides is invaluable and we have already seen a positive impact on our team. We are happy that this partnership will assist us in creating a safe environment for our players in the years to come.”