Proposed UK Gambling Tax Surge Sparks Industry Outcry and Economic Concerns – London Post

The UK’s gambling industry has reacted following reports that the government is currently considering increasing the gambling tax up to a whopping 138%, following a report issued on the British news portal, The Guardian. Relevant parties have hit back, calling out the proposals for not taking into consideration the complexities of the sector, while completely disregarding the negative impact an increase of this kind could have on the industry. While the government hasn’t officially announced any plans so far, the report suggests that measures could crop up in the upcoming budget for 2025 set to be delivered on the 30th of October by Labor’s Chancellor Rachel Reeves.

Operators fear the move could harm the sector’s growth and have negative economic implications. The tax surge is particularly troubling for online casinos, where profit margins are already narrow. Industry insiders warn that these changes could drive players to seek better deals in less regulated markets. This might also affect player incentives like the latest no deposit codes for existing players, which attract new players to legal and regulated platforms. As the debate continues, the industry is pushing back against the tax hike, emphasising its potential impact on jobs and market competitiveness.

The Ripple Effect

Despite several stakeholders shrugging this news off and declaring that it is highly unlikely to gain approval within the government, the market also saw some of the largest gambling shares plummet a couple of days after the news was released,which included big players like Evoke, Flutter, Rank Group and Etain.

Louie French, Shadow Sport Minister for the UK described the proposals as a terrible mistake when speaking to a radio interviewer. He explained how “sharply doubling taxes on online gambling sites and betting shops could potentially wipe out a firm’s profit,” which would eventually lead to job losses, lack of funding especially when it came to sports, and ultimately closure of businesses. He also mentioned how a drastic move of this sort would impact all sports “from darts and snooker to rugby and football”.

Stalinesque and Draconic

“It’s bollocks” declared Steve Donoughue, an established gaming consultant. Referring to the Institute for Public Policy Research (IPPR) report’s approach as “Stalinesque”, Donoughue points out that the report suggests doubling taxes on ‘higher risk’ offerings such as online casino and sports betting, while leaving ‘lower risk’ products such as the National Lottery unaffected, to raise to £2.9 billion in the meantime during 2025.

The report’s “full of regulations and restrictions that hold no evidence of being effective,” and every chance of making “people’s lives a lot more miserable” he remarked. The Betting & Gaming Council (BGC) also commented, describing the regulations as “draconian” and “disproportionate” when compared to other tax regimes being implemented across other European countries, which could continue to push players towards the black market.

The Council also raised its concerns about the critical impact the proposed tax increase could have on ancillary sectors such as horse racing. In a news statement, Grainne Hurst, CEO at the BGC explained how any new tax hikes would not only “slam the brakes on growth for our sector,” but also jeopardise employment while “completely derailing horse racing”.

Setting Realistic Standards

Despite the outrage, stakeholders do not currently expect that any of the proposals mentioned in the report would ever be approved. According to a recent blog post by Regulus Partners, it’s unsure whether the British gambling industry cansustain an added £1 billion+ in taxes next year.

It describes the tax raid as damaging and self-defeating, detailing how operating margins would increase by 20%, wiping out or hugely affecting profits, and while Britain’s gambling sector can afford to pay higher taxes, these increases should “only be genuine tweaks in order to work effectively”.

For example, the country could potentially raise another £300 million by increasing the Remote Gaming Duty (RGD) from 21% to 25%, but these figures aren’t anywhere close to the £1 billion mark indicated in the notorious report.

An Unexpected Blow

According to Senior VP at Eilers & Krejcik Gaming, Alun Bowden, the Guardian’s report has been taken “surprisingly seriously”. In his LinkedIn post he explained how even though he believes such as huge tax hike is unlikely to be approved, more reasonable tax increases could still be in the pipeline.

He explained how for a long time he’s felt that the increase of gambling taxes in the UK was “inevitable, and I’m not alone in saying that; we’ll either see them nudge up a little in this budget or the one that comes,” he explained.

According to Bowden, sports betting can take a portion of the load, with the current 15% rate being relatively low when compared to other European countries, “while online casino is still at a reasonable level”. Of course, this all boils down to the bottom line, with Bowden suggesting that there might be some leeway to mitigate this, especially when it comes to casino bonuses.

What About Those Shares? 

The good news is that there has been a recovery in gambling share prices in the meantime, with companies like Playtech going down by 13% but bouncing back to its original price, and Etain dropping from 15% up to 7% in the first week.

The same however cannot be said for companies such as Evoke, which went down by 16% and never quite seemed to recover, while Flutter seems to be fluctuating without completely recovering either so far.

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