Quoting sources close to the Treasury, the Guardian reports that there are several proposals on the table. These include plans to increase certain gambling tax for online gambling operators in the UK.
Sources said new measures could be included in this month’s budget. Chancellor Rachel Reeves is due to deliver the budget on 30 October – the first of the new Labour government. Labour won the general election by a landslide earlier this year and is now back in power after a 14-year absence.
Today, UK remote gaming duty sits at 21% of operator profits, this is based on a 2019 increase from the previous rate of 15%.
In response to the report listed operator share prices have tumbled, with Entain were down as much as 15%, while Evoke shares fell as low as 16%. Playtech shares are currently down 13%, while Rank Group is trading almost 7% down on opening.
In addition, Flutter, which is now listed on the New York Stock Exchange, felt the immediate impact of the report. On late Friday trading, its share price tumbled and closed almost 9% down. Today shares are currently down almost 8% on opening price.
Remote gaming duty could hit 50%
The proposals reportedly come from influential thinktanks and supported by one of Labour’s top individual donors. Derek Webb, a former poker player and casino game inventor, has given £1.3m to Labour since the start of 2023.
One plan from the Institute for Public Policy Research (IPPR) suggests the government could raise up to £2.9bn in 2025 by doubling taxes on “higher harm” products, including sports betting and online casino. The IPPR would not amend duties on gambling it sees as being “lower harm”, such as the National Lottery.
However, the current 15% general betting duty on land-based bookmaker profits could be doubled. Remote gaming duty could also jump from 21% to 50% under the same plan.
“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,” the IPPR said.
A second plan comes from the Social Market Foundation (SMF). Still in the works, this proposal would also see tax rises but at a more moderate rate than the IPPR’s plan.
Part-funded by Webb, the SMF is proposing raising remote gaming duty to 42%. This, it said, could raise approximately £900m in additional funds.
How has the marker reacted?
The Guardian published its article on the talks late Friday (11 October) afternoon. The piece also featured comments from the Betting and Gaming Council (BGC), which hit out at the plans.
“Comparable markets abroad which have imposed draconian regulations and disproportionate tax regimes have seen a spike in illegal black-market gambling,” a BGC spokesperson said.
Dan Waugh, an adviser at the gambling consultancy Regulus Partners, also warned about the impact of the increase. He said could have “adverse consequences” on the market.
“If one raises the cost of consumption, it is conceivable that one may cause additional harm, because at some point the consumer will bear that additional cost,” Waugh said.
Goodbody analyst David Brohan said in a note he did not expect the increase to be as much as reports as suggesting.
Brohan estimates a remote gaming duty increase of between 3% and 5% is likely.
“While it is clear the focus will now be on tax increases for the sector in the upcoming budget, we expect any increases to be moderate in line with the economic importance of the industry.”
Following in Dutch footsteps
Should the plans proceed, Britain would become the latest European market to implement higher gambling taxes.
Last month, the Netherlands parliament announced a staggered rise in tax. The rate will initially increase from 30.5% to 34.2% of GGR on 1 January next year. This will then rise again to 37.8% on 1 January 2026.
The move has been met with much criticism, with various stakeholders expressing the hike could push operators out of the market, or increase costs for consumers could see them turn to the black market.
One damning report warned the tax hike would cause significant losses for online operators and likely force Holland Casino to close branches or fold its online offering.
Alan Littler of Dutch gambling law firm Kalff Katz & Franssen told iGB the Dutch government “appears to be deaf to the industry’s concerns”.
Original article: https://igamingbusiness.com/legal-compliance/britain-gambling-tax-increase/
