Tax raid on gambling could wipe £3.1bn off UK economy, new study claims
EY conducted new research into the impact of proposed gambling tax hikes.
UK.- The Betting and Gaming Council has claimed that a possible gambling tax hike in the UK could wipe £3.1bn off the sector’s UK economic contribution. With chancellor Rachel Reeves widely expected to announce tax changes for the industry in the autumn budget next month, the lobby group commissioned research from EY on the possible impact of such a move.
Over 100 Labour politicians and the entire Liberal Democrat party are supporting proposals from the think tanks SMF and IPPR to raise taxes on UK gambling in order to reduce child poverty. However, the BGC argues that such a move would risk over jobs, push more customers to the black market and reduce the sector’s UK economic contribution, while raising a fraction of the amount claimed.
The BGC said its members currently contribute £6.8bn to the UK economy, pay £4bn in tax, and support over 109,000 jobs across the country, including thousands of high-skilled tech roles in areas like Stoke-on-Trent, Manchester, Leeds, Nottingham, Sunderland and Warrington.
Chief executive Grainne Hurst said: “It is now clear these further tax rises are a direct threat to British jobs and economic growth. The figures speak for themselves – tens of thousands of jobs lost, billions diverted to the black market, and a possible £3 billion hit to the economy.
“Tax raids like those proposed would mean fewer betting shops, casinos and bingo halls, fewer jobs, and a huge boost to the growing, unsafe gambling black market, while not raising anywhere near the tax claimed.”
Currently, bookmakers pay tax on gross gambling yield (takings minus customer winnings) at 21 per cent for online games like bingo, 15 per cent for sports betting and 20 per cent for machine gaming.
Both the SMF and IPPR recommended rates of 50 per cent for online gaming, or Remote Betting Duty, and 25 per cent for sports betting, termed General Betting Duty.
EY’s analysis suggests that the IPPR’s proposal would cost 40,000 jobs, channel £8.4bn in stakes to the black market and wipe £3.1bn off the sector’s economic GVA. An analysis of the SMF proposals estimate a cost of 30,200 jobs, £8.1bn in stakes lost to the black market and cost £2.5bn in lost GVA to the economy.
The IPPR claims its proposal would generate £3.2bn in revenue. EY’s study claims the short-term gain would be closer to just over £1bn but that when factors such as lost employment, reduced corporation tax, lower National Insurance contributions and venue closures are taken into account, the net gain could fall to under £500m.
Both think tanks have also ignored the 2023 Gambling Act Review White Paper – the most comprehensive reform of UK gambling laws in a generation –which is already projected to reduce sector revenues by around £1bn.
Hurst added: “Balanced regulations and a stable tax regime guarantee a growing regulated sector. But these proposals would achieve the absolute opposite of that and undermine the very consumer protections that keep people safe by pushing customers towards the unregulated black market, where there are no safeguards, no tax receipts, no jobs, and no support for the sports we all love.
“Britain’s betting and gaming sector is a world leader – employing thousands, paying billions in tax, and investing in British sport. The choice is clear: back a successful, sustainable, regulated British industry – or risk losing jobs, investment and growth.”
The consequences are likely to be felt most sharply on Britain’s high streets, where bookmakers already face challenges. Betfred has claimed that tax rises could force the closure of all its 1,300 betting shops, risking almost 7,000 retail jobs. However, Flutter recently announced that it will close 47 Paddy Power betting shops anyway, regardless of any tax hike, and Evoke is believed to be already considering closures of William Hill betting shops.
