Tax-Fearing UK Betting Firms Brace for Autumn Budget
The 2024 Autumn Budget, Labour’s first Budget in 14 years, is set for 30 October. One of the most eagerly anticipated Budget’s in recent years, potential changes to capital gains tax, inheritance tax, pensions, and corporate tax have long been mooted. Reports now suggest the gambling industry could face a massive increase in tax and duties.
Will Chancellor Rachel Reeves increase taxes on UK gambling companies at the next budget? ©Getty
Claiming the new Labour government must plug an ‘inherited’ £22 billion hole in public finances, UK Chancellor Rachel Reeves and Prime Minister Keir Starmer have confirmed significant economic challenges lay ahead. On Friday, a Guardian story declared that “Ministers are considering a tax raid of up to £3 billion on the gambling sector”.
Thinktanks Think Big in Tax Terms
Reportedly, Treasury officials are understood to be weighing up proposals put forward by two influential thinktanks: The Institute for Public Policy Research (IPPR) – which recommends doubling taxes such as the 15 per cent general betting duty levied on high-street bookmakers’ profits – and the Social Market Foundation.
A doubling in the Remote Gaming Duty – currently set at 21 per cent – is called for by the Social Market Foundation, which it suggests could generate an additional £900 million for the Exchequer. On Tuesday, the organisation announced a new poll, commissioned on its behalf, shows that 52 per cent of Britons believe the government should increase tax on online gambling.
While the Social Market Foundation’s website declares: “We do not take sides in party political debates but work to inform people, of all parties and none, about how public policy can improve outcomes, especially for the people and places too often left out of the political conversation,” the Westminster organisation does appear to have a dog in the fight.
Social Market Foundation is part-funded by Derek Webb – founder of the Campaign for Fairer Gambling – who has long questioned the impact of the UK Gambling Industry. Webb, who ironically made his fortune as a casino game inventor, is also a big Labour Party supporter. So big, he is listed as the fifth largest individual donor to the party, giving Labour £500,000 since May and £1.3 million since the start of 2023.
Horse Racing Jobs and More at Risk
News that the new government is considering making significant changes to the taxes imposed on gambling companies was met with indignation. The gambling industry immediately expressed concerns over the proposals, with industry leaders arguing tax hikes could cause significant harm to British horse racing’s finances.
Operators voiced additional concerns of knock-on increased consumer costs, driving gamblers towards unregulated or black-market alternatives. Jobs, in an industry believed to employ over 110,000 people in the UK, were also described as “at massive risk” by any taxation change.
Underlining the potential harm of a steep increase in gambling taxes, James Wheatcroft, an analyst at the investment bank Jefferies, told City AM: “The proposals apparently being considered would all but wipe out bookmaker profitability in the UK, per our estimates.”
Self-Defeating Tax Raid Cannot Be Ruled Out
Ultimately, many experts believe that ‘tweaks’ to the current taxation on gambling are more likely than a wholesale increase in the seven types of betting and gaming duty levied on licenced operators. In a blog post, strategic advisory business Regulus Partners said:
“A damaging and self-defeating tax raid cannot be ruled out, especially given the Labour donor connection, but there are reasons why the treasury has not been so reckless before, and we doubt they will be so reckless this time.”[1]
Financial markets have not shared Regulus’ optimism and share prices in gambling firms have tumbled. In the aftermath of The Guardian story, FTSE 100 listed Entain Plc, owner of Ladbrokes and Coral, saw its share price slump by nine per cent. Evoke, owner of brands such as William Hill and 888, had 12 per cent taken off its value.
Flutter Entertainment – with a portfolio that includes Mecca Bingo, Grosvenor Casinos and Paddy Power – had five per cent of its value erased. Combined, over £2 billion was wiped off the stock market value of the major UK-listed betting firms.
- Can the British gambling industry pay an extra £1bn+ in taxes?, (October 14, 2024), Regulus Partners, Retrieved October 15, 2024.
