Labour targets gambling industry to rake in billions
•
19 Oct 2024 •
Reading time: 3 minutes The UK Labour Party is considering a big increase in taxes on gambling companies. Perhaps as much as £3 billion. Chancellor of the Exchequer Rachel Reeves is looking at ways to plug a huge £22 billion hole in the government’s finances. She sees the gambling sector as an opportunity to close that gap.
Gambling companies brace themselves for tax hike
The Treasury is looking at plans from a number of influential think tanks that want online casinos and bookmakers to pay a lot more tax. The proposal is to even double certain taxes on gambling companies. And yes, that’s no small beer. The idea could well appear in Labour’s budget, the first in 14 years.
Derek Webb, Labour’s big moneymaker, wants tougher rules
Derek Webb, a former poker player and inventor of casino games, is backing these tax plans. But Webb is more than just a supporter: he has already donated £1.3 million to Labour since the start of 2023, making him the party’s fifth-biggest donor. Webb wants gambling companies to pay more, and not just for fun. He believes the gambling industry should be regulated more strictly to make things a bit safer for players.
How much will Labour raise? Estimates vary
The plans on the table come from the Institute for Public Policy Research (IPPR), among others. According to them, the government could raise almost £3 billion next year if it doubled taxes on high-risk gambling products, such as online casinos. And if all goes well, that figure could rise to £3.4 billion by 2030. The beauty of the plan? Less risky gambling products, such as the National Lottery and bingo, would be left alone.
Another think tank, the Social Market Foundation (SMF), is proposing to double the tax on online gambling from 21% to 42%. This would generate an additional £900 million. And according to them, that’s not so crazy when you look at countries like the US, where gambling companies already pay much more tax than in the UK.
Gambling industry not happy with Labour’s plans
Of course, the gambling industry is not exactly thrilled with the idea of higher taxes. The Betting and Gaming Council has already warned that countries with stricter rules and higher taxes have seen an increase in illegal gambling. So it remains to be seen whether this measure will really have the desired effect.
Dan Waugh, an expert at gambling consultancy Regulus Partners, even warns that higher taxes could be counterproductive.
“If the costs for players go up, that could actually cause more harm, because ultimately they have to foot the bill.”
Decision only made at the last minute
The Treasury has not yet made a final decision, but it is likely that the proposal will be seriously considered. A decision will only be made in the final days, just before the new budget. The aim? Getting everything right and closing the huge financial gap.
There is also a lot of unrest within the gambling industry about the possible impact on horse racing. This sector brings in a lot of money through gambling companies, both through levies and media contracts. A significant tax increase could easily turn that upside down.
Despite all the discussions, the Ministry of Finance is keeping its mouth shut about what will ultimately end up in the budget.