Gambling Duties Under Review as Treasury Seeks New Revenue Sources

In a bid to fill the gap in its upcoming budget, the UK Treasury is evaluating plans to increase gambling taxes. According to reports, Chancellor Rachel Reeves is expected to raise about £30 billion in revenue to cover the budget shortfall. This review is anticipated to have major implications for the gaming and betting industry, as it could change the current gambling tax system. 

To fill this budget gap and raise the needed money, Chancellor Reeves stated that the government wouldn’t be making any adjustments to VAT, income tax, or national insurance. With the gambling industry looking to bear this shortfall, many stakeholders and casinos under the UK’s jurisdiction are worried that higher duties could not only reduce operator margins but also change consumer behaviour. In response to tighter regulations and increased costs, some players may begin exploring new casinos not on GamStop. These are offshore sites that are not bound by the UK’s self-exclusion scheme and regulatory restrictions.

A Politically Acceptable Proposal

Given that the government has already ruled out increasing national insurance contributions, income taxes, or VAT, raising gambling duties looks like the best available option. It is also appealing to lawmakers because there is little or no public resistance when the taxes of gambling operators are increased. 

The timing of this review is also surprising because the government has recently announced plans to simplify its current gambling tax rate. In April, the UK Gambling Commission (UKGC) and the Treasury announced that the current three-tier tax rate system would be merged into a single, higher tax rate. They include: Pool Betting Duty (PBD), Remote Gaming Duty (RGD), and General Betting Duty (GBD), which have tax percentages ranging from 15% to 21%. The new tax system hasn’t been implemented yet as the government is consulting with stakeholders and industry experts.

Before agreeing to the idea of a unified tax rate, other suggestions have been proposed to the government. The UK Treasury had previously considered raising about £3 billion in revenue from the gambling industry. The Institute for Public Policy Research (IPPR) had also suggested that betting duties be doubled from 15% to 30% and the remote betting duty increased to 50% but the suggestion was met with strong opposition from industry stakeholders. 

Opposition and Industry Backlash

The idea of new tax reforms has sparked reactions from stakeholders in the gambling industry, with the CEO of the Betting and Gaming Council, Grainne Hurst, calling the idea “fantasy economics.” She said the idea was peddled by people who are campaigning against gambling. She added that any increase in taxes would bring the gambling sector to a halt, threaten the jobs of many workers, and totally derail horse racing. In response to the recent developments, the British Horseracing Authority (BHA) initiated the “Axe the Racing Tax” campaign. The campaign warns that increasing gambling duties would affect the sport financially, as it depends a lot on betting revenues. 

What Could Happen

While there are concerns about how the proposed reforms could affect the gambling sector, the Treasury is still undergoing consultations to see what reforms would be acceptable. However, one thing is clear: the Treasury remains committed to unifying and simplifying its gambling tax framework. With the budget deadline approaching, the attention is on the government’s next move, and many will be watching to see how much revenue the government can take from the industry without bringing it to a halt or stifling its growth. Regardless of the outcome, the gambling industry could be faced with yet another challenging budget period.