Bookmarkers and politicians react to UK gambling tax hike proposal
Gordon Brown’s proposal for a steep rise in gambling tax has received strong pushback.
UK.- The future of UK gambling tax was already a contentious issue due to the Treasury’s proposal to unify the rate for different online verticals under a single Remote Betting and Gaming Duty (RBGD). Bookmakers and the British Horseracing Authority are campaigning against the proposal, which they say would raise the tax rate for horseracing betting at a time that industry is already struggling.
But the debate became even more heated last week when former prime minister Gordon Brown backed a proposal to from the think tank IPPR to increase remote gaming duty for online casinos from 21 to 50 per cent, slot machines games duty from 20 to 50 per cent and general betting duty on non-racing bets from 15 to 25 per cent.
For context, the current Remote Gaming Duty, which covers online slots, poker, bingo and similar, is levied at 21 per cent of gross profits based on a place of consumption (POC) model. General Betting Duty varies depending on vertical: fixed-odds betting is taxed at 15 per cent, sports spread betting at 10 per cent, and financial spread betting at 3 per cent. Pool Betting Duty is charged at 15 per cent on gross profits, applicable to sports pools only (excluding horse and greyhound racing).
Reaction to gambling tax hike proposal
Betting operators and other politicians from across the political spectrum have been quick to react to Brown’s proposal.
Writing in The Guardian, Labour MPs Alex Ballinger and Dr Beccy Cooper added their support for the call, arguing that the £11.5bn sector benefits from VAT exemptions and pays far less tax than the 35 to 57 per cent tax rates seen in some other countries in western Europe and the US. They note that cigarettes and alcohol are taxed at up to 80 per cent and that gambling leads to harms that cost the NHS and other services well over £1bn a year.
However industry analysts have noted that if taxes are increased, operators are likely to have to worsen odds, which could have the effect of pushing players to the black market. Operators have also noted the example of the gambling tax hike in the Netherlands, where the national regulator, the KSA, has confirmed that the initial rise this year has been counterproductive, leading to a decrease in tax revenue from the sector.
Flutter CEO Peter Jackson told The Telegraph: “Raising taxes is not straightforward and we have operational experience around the world whereby if you continue to push tax rates up, you actually see a reduction in the tax take. This is the case in the Netherlands, for example, where the government is facing a €200m (£173m) shortfall.”
Shadow minisiter Louie French also criticised proposal to raise gambling tax. Writing on X, he said the move would hurt employment as well as sports.
Meanwhile, the think tank Tax Policy Associates has suggested that there’s a gap in the IPPR’s calculations. “This is a very large proposed tax increase – with the largest tax, remote gaming duty, rising 138 per cent. But the IPPR’s calculation is “static” – it simply multiplies current gambling profits by the new rates. The IPPR justifies this with illustrative calculations showing gambling companies worsening their odds to maintain their profits. But there’s a point beyond which gambling companies can’t do that, and the IPPR’s proposal may go well past this point.
“If the IPPR are wrong, and the tax can’t be passed on, then the revenues raised would be much less than £3bn – potentially half,” it adds. “This is always the problem with “sin taxes”. We can use them to raise revenue. We can use them to deter the “sin”. But we need to be clear what we’re trying to achieve. And we need to be honest and admit that most of the tax is realistically paid by the sinners, not the companies selling the sin.”
It should be noted that Gordon Brown’s proposal is not an official Labor policy for now, and some within the party, including Richard Baker, the MP for Glenrothes and Mid Fife in Scotland, have urged caution over the risk of overtaxing the sector. A consultation on the existing proposal for a new unified GBGD closed on July 21.
