The UK gambling industry is holding firm after mounting pressure from a parliamentary select committee published a report on 7 November calling for higher taxes on gambling products with a greater potential for harm. The move comes just weeks before Chancellor Rachel Reeves’ first budget, in which further tax increases on the industry’s most profitable online sectors are strongly forecast.
Last month the committee took evidence from both the betting industry and supporters of higher taxation, concluding that gambling products such as online slots and casino-style games should be taxed more heavily than traditional forms like horse racing and sport related events.
Committee chair Dame Meg Hillier stressed the social effects of gambling problems were “plain to see,” criticising what she described as the industry’s “boldfaced claim” that gambling does no social harm. “Online betting games are extracting huge amounts of money from people who have been funnelled into the most addictive, harmful corners of the industry via their love of sports or the occasional game of bingo,” she said. Hillier urged the government “not to cave in to industry scaremongering” and to ensure taxation reflects the level of harm caused.
The committee report pointed out evidence from Social Market Foundation (SMF) director Theo Bertram, who argued that the more damaging parts of the gambling sector conceal themselves behind its socially accepted activities, such as betting on horse racing which has been part of British culture for generations and also adding great social days out.
In contrast, the report dismissed any link between higher tax rates and the size of the gambling black market which raised some eyebrows of many. Citing research published in the Harm Reduction Journal and testimony from former Paddy Power chief executive Stewart Kenny, the committee said there was no evidence that increased taxes drive players toward unregulated operators. Critics noted that the Treasury’s supporting graph omitted several countries in Europe with high tax rates and significant black markets, including the Netherlands, Germany and France.
Ironically, the academic paper the committee referenced suggested that a sustainable maximum tax rate for gambling lies around 30% which is well below the 50% level proposed by the SMF and the Institute for Public Policy Research (IPPR).
Analyst Dan Waugh from the Regulus Partners said the report’s key recommendation to raise Remote Gaming Duty (RGD) and Machine Games Duty (MGD) above land-based Gaming Duty was poorly defined with many of them not having much understanding of betting personally. “It is unclear whether the committee means above 15%, which is already the case, or above 50%, which would effectively close most betting shops, bingo clubs, casinos, and arcades,” he said. “It seems doubtful whether even the committee members know what they have recommended.”
Responding to the report, Betting and Gaming Council (BGC) chief executive Grainne Hurst emphasised that 22.5 million British people gamble each month and that only 0.4% of adults meet the NHS definition of problem gambling. She warned that further tax rises will strongly push players to unregulated sites in turn cutting government revenue and reducing the funding gambling companies provide to major sports such as horse racing and football.
While the report strengthens political momentum for tougher taxation backed by former Prime Minister Gordon Brown, Labour’s Lucy Powell and more than 100 MPs the industry hopes now rest on the Treasury’s final decisions. According to The Telegraph, horse racing is expected to be spared the highest rates, reflecting its historical ties to the sport and its separate campaign to protect its funding.