Economic Impact
The UK’s Betting and Gaming Council (BGC) has warned that proposed increases to gambling taxes could remove up to £3.1 billion from the economy and put as many as 40,000 jobs at risk.
The warning follows the release of a new report, commissioned by the BGC, from consultancy firm EY-Parthenon. The report analyses the economic effects of several tax changes under consideration by the government.
The government is expected to outline its plans for gambling taxation in the upcoming budget, which is due on November 26. The report, titled "Impacts of Changes to Betting and Gaming Regulation," modelled the outcomes of four possible gambling duty approaches. The UK’s three main gambling duties are a General Betting Duty (GBD) at 15%, Remote Gaming Duty (RGD) at 21%, and Machine Gaming Duty (MGD) at 20%.
EY’s analysis suggests that the most severe impacts would come from proposals put forward by the Institute for Public Policy Research (IPPR) and the Social Market Foundation (SMF).
Potential Scenarios
The IPPR’s plan proposes raising all three tax rates. They would like to see GBD rise from 15% to 25%, RGD increase from 21% to 50%, and MGD go from 20% to 50%. According to the report, this could erase £3.1 billion from the gambling industry’s gross value added (GVA). It would also lead to the loss of 40,000 jobs, including 14,100 direct roles and 26,000 indirect positions. EY also warned that black market gambling stakes could rise by £8.4 billion.
The SMF’s proposal would raise RGD from 21% to 50% and GBD to 25%, while keeping MGD the same and cutting horse racing betting duty to 5%. According to EY, this would lead to a £2.5 billion loss in GVA and more than 30,000 job losses, along with an £8.1 billion rise in black market stakes.
These changes may initially raise tax revenues by up to £1 billion. Although EY estimates that once factors such as reduced employment and lower corporation tax are considered, the treasury’s net gain may actually fall below £500 million.
EY also considered less severe options, such as aligning all duties with RGD at 21% or increasing all duties by 5%. They believe that even under these scenarios, the sector’s GVA would shrink and several thousand jobs would be lost. EY believe aligning rates could cause up to 4,700 job losses, and a 5% increase could eliminate 10,000 jobs and reduce GVA by £860 million.
A Direct Threat
BGC Chief Executive, Grainne Hurst, said that additional tax hikes would be a “direct threat” to UK employment and growth. She urged the government to adopt balanced regulations and a stable tax regime in order to support a sustainable, regulated gambling sector.
Industry leaders have also warned that tax pressures could lead to widespread closures on the high street. William Hill, Flutter Entertainment, and Entain have all said that duty increases could lead to shop closures and redundancies.
