It’s not often that the HMRC gets taken to court and loses.
But that’s exactly what happened last week when Jumpman Gaming, the operator of online casinos in the UK and overseas, managed to defeat the government’s tax department in the appeal court.
The decision saved them from having to pay an eye-watering £13.2 million tax bill… and could change the entire landscape of gambling taxation in the UK.
Mega Reel Mayhem
The origins date all the way back to 2018, with HMRC declaring that Jumpman Gaming needed to pay the huge tax bill over a free spins promotion that the firm offered between July 2018 and December 2022.
New customers to Jumpman Gaming were able to claim a free spin of their Mega Reel, a promotional wheel that offered players prizes that ranged from free spins to cash.
HMRC’s legal team argued that free spins won via the Mega Reel promotion should be subject to tax in the same way that paid spins are, demanding £13.2 million in unpaid duty.
Jumpman decided to fight their corner, arguing that it would be impossible for them to track the player’s journey from the Mega Reel promotion through any subsequent spins.
Initially, that took them to the appeal court (First-tier Tribunal), where the presiding judge decided that the statutes of the Finance Act 2014 determined that Jumpman were liable for the unpaid Remote Gaming Duty (RGD) – the argument being that games played with ‘waived wagers and free plays’ still count as a ‘gaming payments’ that can be taxed.
Unsatisfied with the outcome, Jumpman Gaming decided to take HMRC to one of the highest appeal courts in the land – the Upper Tribunal – and this time the decision would go in their favour…
Day In Court
Once again, HMRC argued that free spins won via a promotional campaign, which substituted for standard paid wagers, were still liable for RGD payments.
Jumpman Gaming asserted that while the initial spin of the Mega Reel was subject to taxation, any subsequent spins won from the promotion were exempt as they didn’t constitute a ‘gaming payment’.
The judges, Guy Brennan and Swami Raghavan, came down on the side of Jumpman. They agreed that HMRC’s interpretation of the Finance Act, which would require an operator to trace every single spin that a player made following their promotional win, was arduous and impractical.
They agreed that the wording of the Finance Act did not account for casinos and betting sites having to create such a lengthy chain of recorded spins, and so decided that the subsequent spins that followed the Mega Reel also fell into the tax exclusion.
“On the correct interpretation of ss159A(4) and (5), the Further Free Spins fall within the statutory exclusion and do not give rise to liability to RGD,” the official judgment decreed.
Having also held the original decision that the Mega Reel spin fell outside of the auspices of RGD, Jumpman’s tax liability was reduced from £13.2 million to zero.
Mounting Tax Pressure
To describe the result as a shock would be an understatement, with a legal expert at Pinsent Masons declaring the verdict as ‘very surprising’ and a ‘defeat the purpose of the 2017 amendments’ to the Finance Act.
But it was met with celebration by other operators, who themselves could have been liable for millions of pounds in unpaid RGD had the decision gone the other way.
The beleaguered Evoke Group, who own William Hill and other UK facing brands, had previously confirmed that they could have owed HMRC £17.6 million had Jumpman’s appeal failed – money that they scarcely have as they face a £243 million takeover bid from Bally’s Intralot.
That’s just one example of many, confirming how important the verdict is for the financial health of the gambling sector.
Of course, there’s added pressure now with RGD increased from 21% to 40% in April of this year following the government’s budget overhaul of the industry’s taxation.
HMRC has already begun to haul in enhanced RGD returns, with £376 million paid into the Treasury by operators between April and June – an increase of £67 million compared to the final quarter of 2025.
Further tax pressures are likely for ‘hybrid’ operators that run both online and high street businesses. It’s expected that MGD – Machine Gaming Duty – will be hiked in the Autumn Budget, completing the full set of industry tax grabs favoured by the government.
At least the Jumpman case has set a legal precedent for firms looking to prevent HMRC from taxing their promotions.