Touted tax rises in the UK market have been described as ‘excessive and detrimental’ by JP Morgan analysts.
The recent tax proposals come from two think tanks, the Institute for Public Policy Research (IPPR) and the Social Market Foundation, both backed by prevalent Labour donor Dereck Webb.
Nonetheless, the Financial Times reported that according to its government sources there are currently no plans to hike tax on the gambling industry.
However, due to consistent reminders from the Labour Party over a £22bn black hole in the country’s finances, it feels like an avenue the government could explore when the Rachel Reeves’ first budget comes around on October 30th.
JPMorgan analysts Estelle Weingrod and Karan Puri both shot down the effectiveness of the plans, suggesting they would lead to an “exodus of operators” from the subsequently “unattractive” UK market.
They also warned of the new framework driving players to the black market, “defeating the purpose of having a regulated market in the first place”.
The JPMorgan analysis also emphasised the pivotal nature of timing these potential new regulations, as the UK gambling industry moves into a key period for implementing of white paper recommendations.
They added that it is “also worth noting that generally, more stringent regulation typically offers the opportunity for scale operators to consolidate the industry further as small/sub-scale operators struggle to mitigate the adverse impact as effectively, eventually exiting the market”.
The IPPR proposals stated that as much as £2.9bn could be raised now, a figure growing to £3.4bn by 2030 through the increasing of remote gaming duty to 50%.
Barclays’ Brandt Montour also criticised the potential doubling of the tax rate for operators, issuing a stark warning to its impact on smaller operators.
He said: “While the article appears credible, the proposed changes (a doubling of most tax rates within one of the proposals) seem egregious to us, and will likely raise realistic concerns over anti-competitive impacts (most small operators would likely close-down) as well as give a substantial boost to the black market.”
