SOURCE: Reuters

(London, England) — Britain's gambling firms and casino operators were left disappointed by Wednesday's budget after Finance Minister Gordon Brown slapped higher tax on large casinos and did little to tempt Internet gambling onshore.

Internet gambling firms looking to locate back to Britain from tax havens such as Gibraltar and Cyprus were left disappointed after Brown set the Remote Gaming Duty in line with land based bookmakers and bingo firms at 15 percent.

Some had predicted it would be as low as 2 or 3 percent.

"The Remote Gaming Duty has been set breathtakingly high, it will do nothing to attract the existing offshore industry onshore and it may indeed have the contrary effect," said BDO Stoy Hayward tax principal Martin Dane.

"With the additional VAT and corporation tax for most companies, it would be almost impossible for a UK-based operation to compete with offshore businesses, especially those located in other EU jurisdictions," said Remote Gambling Association chairman John Coates.

"This decision means that the UK has effectively turned its back on the industry," he added.

However online gaming firms were more sanguine.

"It's not a surprise," said a spokesman for PartyGaming (PRTY.L: Quote, Profile , Research).

Casino operators were also dealt a blow after Brown scrapped the lowest tax rate for the smallest casinos and created a new, higher, 50 percent tax band for the most profitable ones.

"I really get the feeling the government is trying to take the maximum rake out this in terms of revenue raising," said Dane.

The move also means firms hoping to win the right to run any of Britain's planned new wave of 17 Las Vegas style casinos will have to do their sums again.

"It may well discourage operators from bidding (to run the new casinos)" said Deloitte Leisure partner Karen Potts.

"Some have probably been working on an effective tax rate of 20 to 25 percent of duty and I would think this change could well put that up as much as 25 percent."