As we hurtle towards Halloween and the second budget of Rachel Reeves, fears around tax hikes are continuing to spook the UK gambling market.
With eye-opening shareholder updates from both Entain and Rank Group during the long countdown to budget day, this week provided more clues than most as to the true impact of taxation.
It was clear that Entain CEO Stella David had a desire to ensure that the warnings around the impact of taxation were prominent, as she took her message to the mainstream press.
Speaking to The Observer, she stated: “For every £1 of profit we make, over two-thirds is paid out in tax,” she told the newspaper. “Piling on yet more taxes won’t raise more money – it will shrink the regulated market, cost jobs, and hand yet more business to illegal operators who pay no tax and protect no one.”
Updating investors, she emphasised the importance of active engagement between the industry and the government on the issue of tax and the consequences of any decision. “When tax rises, so does engagement in the black market”, warned David.
A sense of frustration is undeniable from industry leaders, as it appears the UK government is ignoring the warning signs from the Netherlands.
David warned that since the Netherlands made the well-documented decision to shift its tax rate to above 30%, the black market control of the country’s industry has moved above 50%.
She urged the government to take a different strategy altogether if it is looking to increase tax intake from the UK gambling sector, pushing for increased legislation that serves to eradicate the black market.
Close dialogue is crucial, according to David, as she urged a unified position on negating the threat of the black market bleeding away tax revenues from the UK economy and placing players under increased risk of exploitation.
She said: “Maths must be used over emotion when it comes to taxing the industry, we are already a very highly taxed sector. We already contribute at a very high level. It’s about having the right balance here. Let’s work together with the payment service providers and the regulators to take the black market sites off the market.”
Warnings of an untaxed industry were also raised by BetMGM, as prediction markets continue to surge across the US.
Updating investors, CEO Adam Greenblatt provided the following outlook: “Our position is clear and aligned with almost 40 state attorneys general, our regulators and our tribal partners. As the law stands today, sports prediction markets are, in essence, illegal sports betting. Prediction market operators have no requirements to protect consumers as licensed sports betting operators do.
“They do not uphold responsible gaming principles. They do not have self-reporting obligations for compliance failings and do not have whistleblowing and information sharing obligations to ensure the integrity of sports. Additionally, and importantly, they’re not paying gaming taxes to the states in which they are operating.”
Hanging over the business
The threat of tax hikes on the UK retail sector remains significant, as Rank Group underlined that the intensified speculation hangs over its business.
Chief Executive John O’Reilly outlined that it was inevitable that the tax changes would have consequences on business development..
Like Entain, he did underpin the importance of their continued engagement with the Treasury on the implications of tax changes and what they would mean for the viability of its venues, employment levels, future investment and the customer.
Furthermore, he echoed David’s sentiment that the industry is already contributing significant amounts, issuing the staunch defence that the Rank is “paying its fair share”.
Lesson from …. Kenya?
Whilst the UK is ignoring red flags from the Dutch market, it seems unlikely it will take lessons from Kenya, however, the market provided an interesting case study on alternative taxing strategies this week.
The country’s budget office revealed that the National Parliament’s decision to overhaul the country’s gambling tax framework is likely to lead to a significant economic boost.
Under the Finance Act 2025, a 5% tax will be levied on players when they withdraw money from their betting account. Previously, bettors were subject to a 20% withholding tax on winnings that excluded the initial stake.
Kenya’s Parliamentary Budget Office estimates that the change is expected to increase revenue collection from Ksh 5.4bn (£32.9m) to Ksh 11.4bn (£69.54 m).
Alongside a 5% tax on withdrawals, the same rate is also applied to any deposits made from a player’s mobile wallet to their betting account following a change in excise duty. Previously, a 15% excise duty was applied at the point of wagering, however, this was changed in June in a bid to improve tax enforcement.
Whilst it is a market entirely different from that of any European counterpart, what the taxation developments in Kenya underscore is that alternative avenues other than just raising tax rates are more effective in terms of boosting tax intake.
