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Possible Gambling Tax Increase Puts 1,287 UK Betfred Shops in Jeopardy
UK High Street Betting Shops at Risk as Tax Hikes Loom
Betfred, a leading name in the UK betting industry with 1,287 shops across the nation, could face closure, putting 7,500 jobs in jeopardy if the chancellor, Rachel Reeves, decides to increase taxes on gambling firms. This stark warning comes directly from Fred Done, the co-founder and chairman of Betfred, in an interview with the Reporters.
Done, who has been a stalwart of the industry since establishing Betfred alongside his brother in 1967, highlighted tax increases as the most significant threat facing the sector in over five decades. This sentiment is echoed across the gambling industry, amid discussions centring on potential tax hikes in the upcoming Budget. Reeves, speaking to ITV, indicated a move towards ensuring gambling firms “pay their fair share of taxes,” a stance that has stirred concerns within the industry.
Former Prime Minister Gordon Brown's suggestion to Reeves to up the taxes on gambling operations to combat child poverty has been met with resistance from the industry. According to the Institute for Public Policy Research (IPPR), imposing a tax rate as high as 50% could generate £3.2bn. However, the Betting and Gaming Council has labelled such measures as “economically reckless,” warning of a possible shift to the black market by gamblers.
Similarly, Evoke, the parent company of William Hill, hinted at the potential closure of up to 200 retail outlets in the face of increased taxation, underscoring the industry-wide apprehension towards such financial pressures.
Fred Done fears that significant tax hikes, even to levels of 35% or 40%, would render the business unprofitable, necessitating widespread closures and resulting in substantial job losses. He also raised concerns about the existing financial strain due to recent escalations in employer National Insurance Contributions (NICs) and the minimum wage, which have collectively added £20m to Betfred's operating costs.
The transition of consumer behaviour towards online betting has already placed traditional betting shops in a precarious position. Rival betting firm Paddy Power announced the closure of 57 shops across the UK and Republic of Ireland, citing the increasing cost pressures and challenging market conditions.
Despite the grim outlook, Done remains optimistic about the continued presence of betting shops on the High Street for another two decades, provided there are no tax increases. However, he acknowledges the overall decline of the UK High Street, accentuated by ongoing closures.
Betfred's latest annual results reported revenues nearing £1bn but showed a slim operating profit of just £500,000 after asset writedowns, highlighting the financial challenges faced by the sector.
The debate over gambling taxes also touches on wider social and financial issues, with critics pointing to the harmful impacts of gambling. Research from the Office for Health Improvement and Disparities in 2023 estimated the cost of harmful gambling to be between £1bn and £1.77bn. Advocates for higher taxes, like Prof Ashwin Kumar from the IPPR, argue for increased duties, especially on online betting, to mitigate these negative effects.
While organisations like GambleAware push for more stringent regulations on gambling advertising to safeguard vulnerable groups, Done maintains that UK-based High Street betting shops offer better protections against gambling-related harms compared to their online and offshore counterparts.
As the industry braces for potential changes, Done's outlook on the discussions with the chancellor is notably pessimistic, suggesting a likelihood of significant closures. The Treasury, however, has refrained from commenting on these speculations.
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