UK Chancellor of the Exchequer Rachel Reeves is set to deliver the Autumn Budget at the end of this month, and its contents could come as an unwelcome surprise for gambling firms.
Sources close to the treasury have revealed that a new tax raid on gambling companies is being considered as part of the government’s plans to mitigate the £22 billion “black hole” found in its finances, according to The Guardian.
New measures being proposed could cost the gambling sector up to £3 billion, but whether or not they will be introduced in a few weeks time has not yet been confirmed.
The proposals, which have been put forward to two influential thinktanks, are thought to include doubling many of the levies on both online casinos and bookmakers.
Industry lobbyists have been quick to voice their opposition to the proposed changes, but sources say that the Treasury remains receptive to the measures. If introduced, the duties could raise additional funding of between £900 million and £3 billion.
Currently, the sector pays seven types of betting and gaming duty, of varying rates. Last year, these duties contributed £3.3 billion to the public purse.
Influential thinktank recommends gambling tax rise
The Institute for Public Policy Research (IPPR) is one of the research institutes behind the new proposals. Data published by the IPPR recommends increases in duties on a range of different products, estimating that such changes could bring in an additional £2.9 billion next year, and up to £3.4 billion by 2030.
Its tax plans include the doubling of taxes on products thought to be most harmful in the rise of problem gambling and gambling addiction. Online casino games have been named as one such product, and as such they could face a doubling of duties in the new budget.
Activities thought to be less harmful, such as lottery games and bingo are not expected to be affected by the proposed changes. However, the 15% general betting duty, which is due on all profits made by high-street bookmakers, could well be doubled.
The UK government currently charges a remote gaming duty on profits from online operators, set at 21%. Proposals currently being discussed could see this rise to 50%.
Data published by the IPPR recommends increases in duties on a range of different products, estimating that such changes could bring in an additional £2.9 billion next year, and up to £3.4 billion by 2030.
“We suggest this is the best application of the ‘polluter pays’ principle and it will create incentives for companies to focus on lower-harm products," an IPPR spokesperson said.
The Social Market Foundation, another prominent thinktank, has also recommended a rise of gambling duties. The organization proposed setting taxes that were more in line with those in several U.S. states, by upping the current 21% levy to 42%.
Party donors voice support for the measures
Derek Webb, a former poker player and inventor of many popular casino games has campaigned for tougher regulation of the industry. He’s also one of the Labour party’s top donors, having handed more than £1.3 million to the party since the start of 2023. Webb has been vocal in his support for an increase in gambling taxes.
“The anti-gambling lobby has donated at least £1 million to Labour over the past 18 months and you have to wonder what they expect to get in return for that,” an industry source said to The Guardian.
Betting and Gaming Council warns of a potential backfire
The Betting and Gaming Council is of course vehemently against a rise in taxes on the gambling sector.
“Comparable markets abroad which have imposed draconian regulations and disproportionate tax regimes have seen a spike in illegal black market gambling,” a spokesperson for the BGC said to The Guardian.
Talk of a rise in gambling duties in the coming weeks has already hit share prices hard.
Share prices quickly spiralled in response to the recommendations published by UK thinktanks. Entain shares sank by 15%, and Evoke shares fell to 16%. Rank Group shares traded 7% lower on opening and Playtech are currently sitting at a 13% hit.
Flutter was impacted by the reports almost immediately. Its share prices fell dramatically on Friday, closing at 9% lower. And there’s been no swift recovery yet, with Flutter shares still down by almost 8%.
