A potential increase in gambling taxes in the UK could see online operators facing a substantial rise in levies, with new proposals suggesting remote gaming duties could be doubled to 50%, according to sources close to the Treasury. These measures aim to raise up to £3 billion ($3.9 billion) in additional revenue, with some proposals possibly being included in the upcoming budget later this month.
The budget, set to be delivered by Chancellor Rachel Reeves on October 30, will mark the first for the new Labour government, which returned to power earlier this year after a decisive general election victory. Under current regulations, UK remote gaming duty stands at 21%, having increased from 15% in 2019.
The proposals are reportedly supported by influential figures, including Derek Webb, a former poker player and casino game inventor who has contributed £1.3 million ($1.69 billion) to Labour since 2023. Think tanks, including the Institute for Public Policy Research (IPPR) and the Social Market Foundation (SMF), have outlined different strategies for raising funds through higher taxes on gambling operators.
One of the most prominent suggestions comes from the IPPR, which advocates for a sharp increase in taxes on “higher harm” gambling products such as online casinos and sports betting. Under this plan, remote gaming duty could rise to 50%, a move that could generate as much as £2.9 billion ($3.78 billion) by 2025.
The IPPR’s plan also suggests doubling the current 15% general betting duty on land-based bookmakers, while sparing “lower harm” gambling products like the National Lottery from tax hikes.
The IPPR has argued that these proposals align with the “polluter pays” principle, which would incentivize companies to focus on products that are less harmful to consumers. However, concerns about the impact on the industry have already surfaced, with market analysts warning of potential negative effects.
The Social Market Foundation, which has also received funding from Webb, is reportedly working on a more moderate proposal. This plan would see remote gaming duty raised to 42%, generating an estimated £900 million ($1173.44 million) in additional revenue. Although still significant, the SMF’s proposal is seen as less drastic than the IPPR’s.
The market has reacted swiftly to the news of potential tax increases. After The Guardian first reported on the talks last Friday, the share prices of listed gambling operators saw sharp declines. Entain shares fell by as much as 15%, while Playtech dropped by 13%. Rank Group also experienced a 7% decrease, and Flutter, which is listed on the New York Stock Exchange, saw its shares tumble nearly 9% by the close of trading.
Industry representatives have expressed concern about the potential fallout from the tax hikes. The Betting and Gaming Council (BGC) warned that the UK could face a surge in illegal gambling activities if the tax burden becomes too heavy for licensed operators.
“Comparable markets abroad which have imposed draconian regulations and disproportionate tax regimes have seen a spike in illegal black-market gambling,” said a BGC spokesperson.
Industry experts also weighed in on the possible consequences. Dan Waugh of Regulus Partners noted that the proposed increases could have unintended effects on the market, potentially increasing costs for consumers.
“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,” he said.
Meanwhile, Goodbody analyst David Brohan predicted a more modest tax hike, suggesting that an increase of between 3% and 5% was more 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,” Brohan stated in a note.
If the UK proceeds with these plans, it would follow in the footsteps of the Netherlands, which recently announced a phased increase in its gambling taxes. Starting in January 2024, the Dutch tax rate on gross gaming revenue (GGR) will rise from 30.5% to 34.2%, with a further increase to 37.8% planned for 2026.
Original article: https://www.yogonet.com/international/noticias/2024/10/14/81877-uk-weighs-doubling-gambling-taxes-as-operators-brace-for-impact
