(qlmbusinessnews.com Tues. 15th Oct, 2024) London, UK —
Treasury Weighs New Taxes on UK Gambling Sector: £2bn Market Loss
Shares in major UK gambling firms plunged by over £2bn following reports that Treasury officials are considering tax increases on the sector. The selloff came after thinktanks suggested that additional levies could raise between £900m and £3bn for the government.
Chancellor Rachel Reeves is reportedly under pressure to explore tax hikes on the gambling industry as part of efforts to address a £22bn fiscal shortfall ahead of Labour’s first budget in 14 years, which will be unveiled on 30 October.
Two influential thinktanks, the Social Market Foundation (SMF) and the Institute for Public Policy Research (IPPR), have proposed separate plans to raise revenue from the industry. The SMF’s proposal would see an extra £900m raised by increasing online gaming taxes, while the IPPR’s more aggressive approach could generate nearly £3bn by raising levies on the sector's most harmful products, such as online casino games.
Following the reports, shares in top gambling companies took a hit, with Entain, owner of Ladbrokes, falling 8% and Flutter, which owns Paddy Power and SkyBet, down nearly 6%. Evoke, owner of William Hill, dropped 14%, while gambling software maker Playtech and Rank, the owner of Mecca Bingo, also saw declines.
The potential tax hikes come as the government examines ways to raise revenue from an industry that generates £11bn annually from British gamblers. Analysts suggest the government is unlikely to implement the most severe proposals, but the sector still faces heightened regulatory and tax pressures.
The IPPR's plan advocates doubling taxes on “higher harm” products like online casino games, which currently raise around £2.2bn per year. Meanwhile, the SMF suggests raising the remote gaming duty from 21% to 42%, a move that could generate an additional £900m annually.
Jefferies, a leading broker, has warned that sharp tax increases could devastate the industry, wiping out profitability for many operators and threatening the survival of smaller companies. The Betting and Gaming Council's CEO, Grainne Hurst, also criticised the proposals, warning that further tax hikes would harm the sector, derail job creation, and impact horse racing.
The sector is already facing significant regulatory challenges, including a £1bn cost to implement measures from the government's recent white paper on gambling reforms. Additionally, a new levy for problem gambling treatment is expected to raise £100m annually from bookmakers.
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