The Betting and Gaming Council (BGC) has warned that the recently proposed gambling tax hikes by think tanks, including a plan that has been backed by former UK Prime Minister Gordon Brown, would be a “direct threat to British jobs and economic growth”.
The standards body has called upon the UK government to produce “balanced regulations and a stable tax regime” in response to research which showed the UK gambling industry would be severely affected by tax rises.
Independent analysis firm Ernst & Young LLP (EY) was commissioned by the BGC to produce a report examining the impact of UK gambling tax proposals by the Institute for Public Policy Research (IPPR) and the Social Market Foundation (SMF).
Proposals by IPPR, which have been backed by former Labour Leader Brown, have called for a 50% tax on online and retail slots, rising from 21% and 20%, respectively. In addition, it has requested that the general betting duty levied on bookmakers should rise from 15% to 25%.
IPPR has also stated that the general betting duty and horserace betting levy board rates should stay as they are at 15% and 10% respectively.
EY claimed in its report that the proposed tax rises by IPPR would put more than 40,000 UK gambling industry jobs at risk, channel £8.4bn in wagers to illegal operators and impact the sector’s contribution to the country’s economy by £3.1bn.
Proposals by SMF are similar to those of the IPPR, but have instead suggested that general betting duty increases shouldn’t be applied to off-course horse racing bets, proposing a cut to 5% instead. They also wish to keep machines gaming duty at 20%.
In addition, SMF stated that the horserace betting levy board rate should rise to 20% and with its scope extended to non-UK races.
EY claimed in its report that SMF’s proposals would put 30,200 industry jobs at risk, drive £8.1bn in bets to illegal operators and impact the sector’s contribution to the UK economy by £2.5bn.
Direct threat
The BGC has long been against tax increases in the UK, citing potential black market growth and job losses as consequences. The published EY report adds further context to that argument.
“It is now clear these further tax rises are a direct threat to British jobs and economic growth,” commented Grainne Hurst, Chief Executive of the BGC.
“The figures speak for themselves – tens of thousands of jobs lost, billions diverted to the black market, and a possible £3bn hit to the economy. Tax raids like those proposed would mean fewer betting shops, casinos and bingo halls, fewer jobs, and a huge boost to the growing, unsafe gambling black market, while not raising anywhere near the tax claimed.”
IPPR claims that its proposed gambling tax changes would result in £3.2bn in revenue, but this figure has been disputed by EY, which believes the number will be closer to over £1bn in the short term.
EY added that this figure drops further to under £500m when factors such as employment loss, reduced corporation tax, lower National Insurance contributions and venue closures are accounted for.
Plenty of operators that are members of the BGC – including Rank Group, Entain, evoke and Betfred – have already spoken out against tax hikes in the UK gambling industry and the impact such potential increases will have on their operations, especially in the land-based sector.
Hurst added: “Balanced regulations and a stable tax regime guarantee a growing regulated sector. But these proposals would achieve the absolute opposite of that and undermine the very consumer protections that keep people safe by pushing customers towards the unregulated black market, where there are no safeguards, no tax receipts, no jobs, and no support for the sports we all love.
“Britain’s betting and gaming sector is a world leader – employing thousands, paying billions in tax, and investing in British sport. The choice is clear: back a successful, sustainable, regulated British industry – or risk losing jobs, investment and growth.”
