Gambling Sector Affected By Budget Speculation
Many industries throughout the UK are wondering what impact the Autumn Budget will have on them. The gambling sector is one of them. It’s already experiencing the effects of market anxiety, and there could be more to come in the near future.
Two proposals by the Labour could be devastating. © TheDigitalArtist, Pixabay
How Could the Gambling Industry Be Affected by the Autumn Budget?
The UK gambling industry is preparing itself for the Autumn Budget, set to be unveiled by Labour on 30 October. There are talks of significant tax raids, which could have a huge impact on the sector.
The Treasure is considering two different proposals that come with different yet potentially destructive tax policies. As such, some of the industry’s biggest names have lost billions in value.
To give an example, Entain, the owner of Coral and Ladbrokes, has recently had its stock drop by 16%. The company behind William Hill, Evoke, experienced a similar downward turn in stock value.
Others experienced smaller but still noteworthy losses. For example, Flutter, the company behind Betfair and Paddy Power, saw its stock value plunge by 8%. Rank Group, which owns Mecca Bingo, also lost 8%.
Tom Saunders, writing for The Times, has likened this to “pre-Budget anxiety”. Over £3.5 billion has been wiped from various gambling companies thanks to the upcoming Budget.
The Two Proposals
So what are the two proposals the Treasure is looking at? One from the Institute of Public Policy Research (IPPR) would have duties increased by no less than £3 billion.
This would come about through doubling taxes, including the 15% betting duty on profits made by brick-and-mortar bookmakers. If this particular policy were to come into effect, it could have a devastating effect on betting shops.
The other, more impactful policy is from the Social Market Foundation (SMF) and would look at increasing taxes from the gambling sector by approximately £900 million. This would be done by doubling online gambling taxes from 21% to 42%.
It’s predicted that the Treasure will opt for the SMF’s policy. While not quite as intense as the IPPR’s policy, it will still have a major effect on UK gambling companies.
Despite stocks declining in value, some people don’t think the Budget will have too big of an impact on the gambling industry. This is because there’s no confirmation of what the plans are just yet.
Targeting the Gambling Industry
The chancellor is trying to plug a £22 billion hole in public finances and is apparently trying to do this without affecting working people too much. She’s therefore looking to tax large companies, including gambling ones.
Tax rises might not have a serious impact on larger companies. However, they could greatly affect certain parts of the industry, namely land-based venues such as bookmakers.
Many premises are already struggling due to the rising costs. If taxes were to increase, some places could be forced to cease operations and close their doors permanently.
Usually, businesses would try to pass on rising costs to their customers. What makes it hard for gambling businesses to do this is the fact the industry is incredibly competitive.
If a bookmaker decided to offer lower odds, it could potentially make more money. But in reality, those lower odds might encourage people to place bets elsewhere, resulting in less revenue overall.
The reaction of the markets shows that there are genuine fears about what the government could do to the gambling industry. Some believe it’s an easy target because the act of gambling isn’t universally appealing.
This is partly because many companies in the industry, including some of the biggest ones, earn most of their revenue from British players. In years to come, the industry could face even more taxation, not to mention increased regulation.
