Mohit Oberoi, a seasoned writer with an MBA in finance, has over 18 years of experience. His extensive portfolio includes 8,000 articles published in notable platforms, covering global markets, technology, electric vehicles, metals, personal finance,...
Read Full BioGordon Brown, the former Labour Prime Minister and Chancellor, has called upon Chancellor Rachel Reeves to hike the gambling tax in her upcoming Autumn Budget. There has been a global clamor to raise taxes on gambling, including online gaming, and the UK could be next on the list.
Brown has backed the Institute for Public Policy Research (IPPR), which stated in its report that Reeves should increase the tax rates on online casinos and slots, as well as gaming machines, to 50% from the current rates of 21% and 20%, respectively. It has also proposed raising general betting duty on non-racing bets from 15% to 25% and believes that these proposals will help raise around £3.2 billion in additional annual revenues for the Treasury, which can help lift half a million children from poverty.
In his article for the Guardian, Brown said: “Gambling levies aren’t the only source of revenue that could pay to alleviate child poverty. But this should be one straightforward budget choice. The government can fulfil today’s unmet needs by taxing an undertaxed sector.”
Brown, who wants the government to spend the additional funds on alleviating child poverty, added, albeit rhetorically: “Gambling won’t build our country for the next generation, but children, freed from poverty, will.”
Several Countries Have Raised Taxes on Gambling
Governments globally are hard-pressed to bridge the burgeoning budget deficits as most failed to turn off the taps on the fiscal largesse that started during the COVID-19 pandemic. To support their spending, governments have been exploring ways to increase their inflows, especially as economic growth has been tepid at best.
Gambling (along with cryptocurrency, cigarettes, and whiskey) are sectors that are easy targets for tax hikes, and we have seen something similar play out in other countries. For instance, Brazil has increased the Gross Gaming Revenue (GGR) tax by 50% to 18%.
In the US, President Donald Trump’s flagship One Big Beautiful Bill Act mandates a 90% deduction for gaming losses (versus the previous 100% deduction), which could result in gamblers paying taxes even if they don’t make a profit.
States are also chiming in with their own versions, and Illinois has added a per-bet tax. To counter this, DraftKings and Flutter-owned FanDuel have announced a 50-cent surcharge on all wagers in the state.
The Pros & Cons of Raising Gambling Taxes
Those advocating for a hike in gambling taxes view it as a means to boost government revenues, which can then be allocated for social spending. There is also an argument that higher taxes would deter people from gambling and, by extension, addiction towards it.
However, those arguing against hiking taxes on gambling believe that higher taxes might only push more people towards the unregulated markets. As the spokesperson for the Betting and Gaming Council (BGC) said: “These proposals are economically reckless, factually misleading, and risk driving huge numbers to the growing, unsafe, unregulated gambling black market, which doesn’t protect consumers and contributes zero tax.”
The BGC added: “Further tax rises, fresh off the back of government reforms which cost the sector over a billion in lost revenue, would do more harm than good – for punters, jobs, growth and public finances.”
The assertion is not without merit, and in June, Kenya lowered the excise duty on betting stakes from 15% to 5%, a few months after raising it, among other measures, due to fears that it would lead to an increase in unregulated gaming activity. The results of tax hikes on government revenues are also mixed at best, and data released by the Dutch Gaming Authority (KSA) earlier this month showed that the gambling tax increase that went into effect from this year hasn’t led to the expected increase in government tax revenue.
Gambling Stocks with UK Presence Fell on Reports of Tax Hike
While Chancellor Reeves hasn’t confirmed that she would heed to growing calls for a tax hike on the gambling sector, she hasn’t ruled out the possibility either. Meanwhile, gambling stocks with a significant presence in the UK are reeling under the uncertainty over the proposed tax hike.
Last Friday, Flutter Entertainment, which had previously relocated its listing from London to New York, saw a £4.2 billion decline in its market capitalization while Entain Plc and Evoke lost £23 million and £37 million, respectively.
Overall, the regulatory environment for the gaming industry is still evolving globally, which presents both risks and opportunities for regulated gaming companies. While enabling regulations with reasonable taxes can lead to the development of a regulated market and enhance government revenues, stifling regulations coupled with regressive taxes often prove counterproductive.
