The long build-up to Rachel Reeves’ Autumn Budget has been fraught with leaks and lobbying – fuelling fear from a number of sectors, including the gambling industry.
As we sit just a couple of days away from the gambling industry discovering its fate amidst widespread speculation of tax rises, we are reflecting on the key statements issued from some of the biggest operators in UK iGaming.
‘Decimated with closures’
Speaking to the BBC, Betfred owner Fred Done described a potential gambling tax increase as “the biggest threat to the industry in 57 years”, and it comes at a time when the UK high street is being “decimated with closures”.
The operator’s Chief Executive, Joanne Whittaker, also emphasised to The Sunday Times that the Treasury is underestimating the economic role of retail gambling, with Betfred modelling for the worst-case scenario since “people in the Treasury don’t understand our business”.
“The average bet in our shops is £9. People come in for a chat, have a coffee, and enjoy a flutter. We provide a safe, comfortable environment for people who want to bet responsible. We are not the scourge in our society.”
Shop closures galore
In October, evoke warned that it may be forced to close between 120 and 200 William Hill betting shops, putting up to 1,500 jobs at risk.
During evoke’s Q2 earnings call back in August, a “balanced approach” to potential tax increases was asked for by the company’s CFO, Sean Wilkins.
“Increased tax beyond a certain point we know leads to black market growth, which leads to less tax take and zero player protection and is completely against the objectives of the Government. This is not speculation, this is evidenced in the Netherlands,” he said.
Sky Bet sets off
Flutter Entertainment appears confident in building on its current UK momentum to navigate potential headwinds in the market.
When reflecting on the operator’s Q3 results, CEO Peter Jackson said Flutter remains “engaged with policymakers and expects decisions to be based on economic merit”.
Jackson added that he is hopeful the industry’s “substantial contribution to UK tax revenues and employment” will be taken into account, but if tax does increase, he believes Flutter’s “market-leading position and unmatched scale to mitigate the impact as they have previously demonstrated”.
The operator’s UKI business announced plans to close Paddy Power shops across the UK and Ireland due to costs increasing and market conditions being challenging, following a review of its high street estate.
In total, 57 shops will be closed; 28 shops in the UK, 28 shops in Ireland and one shop in Northern Ireland.
Flutter UKI confirmed to SBC News that 247 jobs are at risk, some 128 in the UK, with impacted employees being offered support and redeployment opportunities elsewhere, where possible.
“In light of increasing cost pressures and challenging market conditions, we can confirm that we will be closing 29 shops across the UK (including one in NI) and 28 in Ireland within the next month,” said a Flutter UKI spokesperson.
“We are continually reviewing our high street estate, but it remains a key part of our offer to customers, and we are seeking to innovate and invest where we can as we adapt to different customer trends and needs.”
Flutter also recently confirmed that several commercial and marketing roles have been moved to Malta. According to ITV News, employees across its UKI operations were told that the relocation to Malta was due to a “need to operate more efficiently” and to reduce costs.
“Flutter paid more than £700m in taxes to HMRC last year and we employ over 5,000 people across the UK, including almost 2,000 in Leeds and 600 in Sunderland,” a Flutter UKI spokesperson told iGaming Expert.
“As with most global businesses around the world, we are constantly striving to remain competitive and efficient and to give ourselves the best chance of success in an incredibly challenging environment.
“The challenge we face is only made harder by the recent Gambling Act Review, the significant rise of illegal, unregulated black-market competitors and the possibility of tax rises in the Budget.”
Flutter has made it clear that despite the move, it will continue to be a contributor to the UK economy.
The Flutter UKI spokesperson added: “In June this year, after migrating Sky Bet onto the same technology platform as our other brands, we decided to move a number of commercial and marketing roles to our commercial centre in Malta – where Flutter already employs over 750 people.
“This decision was made for a number of strategic and commercial reasons and will have some tax implications. But Flutter is committed to the UK and Sky Bet will continue to pay UK corporation tax on its profits.”
Beware of the ‘slick black market’
Entain CEO Stella David recently claimed that the inclusion of tax rises for gambling in the budget would have significant consequences for the business.
Speaking to The Times, David stated: “At the end of the day, we want to make a profitable global business. There are other markets we have to pivot to as being more worthy of investment. There will be consequences. Having a dislocating increase in tax will have a dislocating impact on the industry.
“Every point of [tax] increase would actually have an impact that certain shops would become unviable … there is no level that does not have some consequence, the scale depends on how far it goes.”
Like many others, David believes one of the main beneficiaries of a gambling tax increase will be the black market.
“I don’t expect anyone on the street to feel sorry for us at all; that’s not their job, but a normal person on the street who likes to have a bet can’t tell the difference between a black market site and a regulated site,” she said.
“Black market operators are there to take as much cash out of the UK as possible, with as little friction as possible. They can look very slick and very professional. The problem is none of the profits they make come back in tax to the UK Government.”
‘Hanging over the business’
Rank Group is paying its “fair share” in tax, said Chief Executive John O’Reilly in October, adding that the operator has been in talks with the Treasury about the impact an increase could have on its operations.
O’Reilly stated: “Speculation regarding tax changes in the upcoming budget is, inevitably, hanging over the business. We are engaged with the Treasury on the implications of tax changes on the viability of our venues, employment levels, future investment and the customer.
“Last year the group generated £44.6m in profit after tax, having paid HMRC and local authorities £188m in taxes. The Rank Group, with its strong UK focus, is certainly paying its fair share.”
