Former UK Prime Minister Gordon Brown has urged the government to hike gambling tax to ‘turbocharge’ its efforts to eradicate child poverty.
In an op-ed published in The Guardian, Brown underpinned his belief that a new approach is ‘urgent’, amid reports that Chancellor Rachel Reeves must raise tax to cover a £41bn funding gap.
The report from the National Institute of Economic and Social Research (Niesr) stated that “a moderate but sustained increase in taxes” could be looming as a result of the economic downturn, and the gambling industry may well be viewed as one of the easier targets for tax hikes.
Brown echoed calls from the Institute for Public Policy Research (IPPR) for a 50% tax on online and retail slots, rising from 21% and 20% respectively. It is estimated that these two changes alone would raise an additional £1.88bn in revenue for the government.
The IPPR also states that the general betting duty levied on bookmakers should rise from 15% to 25%, except for horse racing.
In the piece, Brown, who led the UK Government from 2007 until his resignation in 2011, laid bare the “Dickensian levels” of child poverty in the UK, describing them as the worst since modern records began.
“There is an urgent need to act. I have not seen such deep poverty since I grew up in a mining and textiles town where unemployment was starting to bite hard,” he said. “The decisions of previous Tory governments have pushed 4.5 million children into poverty. This is a national scandal and a stain on our country’s soul.”
Gambling an easy target
The gambling industry is often seen as an easy target for politicians seeking avenues to boost tax income, given its perception as a sector that generates vast sums of money and, according to the IPPR, derives profits from players who are at risk of “addiction or financial distress”.
Excluding lottery, betting and gaming generated £11.5bn in 2024 and paid £2.5bn in tax, projected to rise to £3bn by the end of this year. If the demands of Brown are met, it is estimated that as much as £3bn extra would be raised.
This sum, stated Brown, could be used to fund reforms as part of the Labour Government’s child poverty review, which has the remit of facilitating an “enduring reduction in child poverty”.
In particular, the IPPR has called for increased gambling taxation as a means to end the two-child benefit cap, which restricts means-tested benefits such as universal credit to two children per family. It is estimated that this would cost the government approximately £3bn during the course of its time in parliament.
The demands of Brown and the IPPR go against current government sentiment to unify betting and gaming tax into a single standard known as the Remote Betting and Gaming Duty.
Although no tax rises have been confirmed as part of this change, it is widely expected that General Betting Duty (15% for fixed-odds bets, 10% for sports spread bets and 3% for financial spread bets) and Pool Betting Duty (15%) will rise to meet the current Remote Gaming Duty of 21% of gross profits.
However, Brown states that it is time for the industry to be “properly” taxed on its earnings, and for levels, especially for remote gaming duty, to be brought in line with nations such as the Netherlands (35%) and Austria (40%).
The Social Market Foundation has also advocated for tax on online slots to better reflect the growing popularity of the sector and the differences in harm between different types of gambling as reasons why taxation changes need to be implemented.
In the report, Alex Ballinger MP stated: “The evidence is clear: some gambling products – like online slots – cause far more harm than others. These harms carry huge costs, from personal debt and family breakdown to rising pressure on public services. Our tax system should reflect this. It is not right that more harmful, low-employment sectors pay less tax than less harmful ones that bring greater social and economic value, like horse racing.”
He also urged Ministers to act on the SMF’s proposals, citing that this approach could raise up to £2bn a year.
Tax revenue stalling
Although tax rises work in theory, the UK would be wise to look at the impact of significant tax hikes elsewhere.
Gambling tax revenue in Germany stalled in 2024 following significant regulatory reforms, despite an upward trend of betting across Europe.
More recently, reports have emerged that the Dutch government is facing a €200m black hole following a 4% tax increase to 34.2% of GGR at the beginning of 2025, which is set to rise again to 37.8% from 1 January 2026.
The Dutch Ministry of Finance projected an additional €200m annually in tax revenue between 2025 and 2028, however, the KSA confirmed that tax revenue has declined from both the online and land-based sector since the change.
These declines have been attributed to players leaving the regulated market in these countries due to the restrictive measures. A fear that has previously been shared by the Betting and Gaming Council (BGC) surrounding similar tax increases in the UK.
Last month, the trade body for UK operators estimated that a third of punters would switch to the black market if a tax hike forced legal operators to withdraw offers and promotions.
Grainne Hurst, CEO of the BGC, warned: “Punters have been loud and clear, hit them with further taxes and they will walk away from the legal, regulated market, straight to the black market, triggering a spiral of decline which raises less tax, and undermines player protections.”
“Balanced regulations and a stable tax regime are the best defence against the black market.”
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