Adam Roarty is a journalist covering sports betting, regulation, and industry innovation for CasinoBeats. His coverage includes tax increases in the UK, covering breaking stories in the ever-evolving landscape of US betting such as the...
Read Full BioThe Betting and Gaming Council (BGC) in the UK has argued that Gordon Brown’s suggestion of raising gambling taxes to combat child poverty would cause “untold damage” to Chancellor Rachel Reeves.
BGC CEO Grainne Hurst released a statement on Tuesday heavily criticizing Brown, who “decided to grab the headlines with a magic wand and an apparent quick fix for child poverty.”
Hurst went on to say that raising gambling taxes “would do untold damage to one of Rachel Reeves’s quickly vanishing allies in her mission to get our industries growing again.”
She also pointed out that the figures cited by Brown are incorrect. Brown backed a study by the Institute for Public Policy Research (IPPR), which claims that increasing gambling taxes would generate an additional £3.2 billion ($4.34 billion), more than double the current £2.5 billion.
Hurst stated that the actual figure is £4 billion, “along with contributing £6.8bn to the economy while supporting 109,000 jobs.”
Brown Boosted Betting & Revenue by Lowering Gambling Taxes
The IPPR’s proposal is to increase the tax on online casinos and slots to 50% from the current rates of 20% and 21%. Additionally, the research advocates raising the rate on sports betting from 15% to 25%.
However, when Brown was Chancellor in 2001, the increase in gambling was attributed to a reduction in betting tax, which resulted in more tax revenue being collected.
Many of the major UK betting platforms, which are BGC members, had relocated their headquarters offshore, allowing bettors to avoid paying tax on phone or online bets. However, Brown removed the tax on bets and instead shifted the tax to the profits of gambling companies.
As a result, Hurst notes that “thanks to Brown, the then three biggest firms – William Hill, Coral Racing and Ladbrokes – repatriated offshore operations back to Britain, creating new jobs.”
The move by Brown also had a positive effect on the betting volume, with the value of bets nearly doubling from £27 billion to £53 billion. Hurst claims doing the opposite now would only serve to reduce the volume of betting and “force punters to abandon their hobby, as horse-racing is painfully finding out”.
Increasing Taxes Will Reduce Legal Betting
In the Netherlands, a recent tax increase resulted in lower revenue being collected by the government. Additionally, sportsbooks have claimed that Illinois moving back to a tax on bets placed, such as the old system in the UK, will only serve to reduce the amount of betting at regulated platforms.
Hurst believes the UK will be making the same mistake and harming the betting industry while driving bettors to unregulated sites. She stated: “Overbearing measures and higher costs (due to tax rises) give the black market a competitive advantage over the regulated sector.”
In June, a YouGov study indicated 65% of bettors believe increasing taxes would lead to more customers turning to unregulated betting sites. It is no surprise that the study was backed by the BGC.
Labour MPs Back Brown
Labour MPs have come out in support of Brown’s claims that raising taxes on gambling companies can help alleviate child poverty. Alex Ballinger and Dr. Beccy Cooper wrote a letter in the Guardian stating: “The government must not be swayed by intensive lobbying and false claims of economic harm or the threat of illegal gambling from the gambling industry, which will of course resist these proposals.”
The letter also claims that UK gambling companies pay significantly lower rates than their European and US counterparts. Ballinger and Cooper state that the current rates of 15% on sports betting, and 20% and 21% on online casinos and slots are below the rates of 35% to 57% paid in Western Europe and the US.
However, a recent study suggests that although some countries, such as Spain, have high rates, the average in Europe is around the same as the UK at 19%.
Hurst argues that it is the claims by MPs and thinktanks, which are not to be believed, stating: “The reality is that think tanks for hire, like the Social Market Foundation and IPPR, are in bed with anti-gambling prohibitionists who simply don’t like our industry.”
The war of words appears set to continue, but it will be the UK government’s decision on whether to change the tax rate that has consequences for the industry.
