Illicit Activities Alert: Reeves Considers Underground Consequences of Proposed Gambling Tax Regulations
In recent news, the UK government is seriously contemplating substantial increases in gambling taxes, particularly targeting the online gambling sector, as part of wider social and economic reforms [1][2]. This move, led by parties such as Labour and backed by figures like former prime minister Gordon Brown, proposes raising the Remote Gaming Duty from 21% to 50%, the Machine Games Duty from 20% to 50%, and the General Betting Duty from 15% to 25% [1].
For companies dominating the online gambling market, such as Entain, these tax hikes could have a significant impact on their profit margins. Historically, many large operators have paid very low effective tax rates, as little as 3-4% corporation tax, partly due to offshore arrangements [1]. These increased duties would represent a major cost increase, making the future profits of companies like Entain uncertain [2].
Entain, whose online business has been bolstered by the Women's Euros, the Club World Cup, and this year's Wimbledon tournament, resulting in record betting, reported a 3% increase in revenues to £2.6 billion for the first half of the year [3]. However, the CEO of Coral and Ladbrokes owner, Stella David, has expressed concern to the Chancellor that such a tax could drive people to unregulated operators [4].
Simultaneously, the surge in betting was due to the success of Chelsea in the Club World Cup, with the most betting ever placed for the annual tennis tournament, Wimbledon, this year [5]. The online investment platforms AJ Bell, Hargreaves Lansdown, interactive investor, InvestEngine, and Trading 212 are also mentioned in the article, but no specific details about the services offered by these platforms or their performance data are provided [6].
Former Prime Minister Gordon Brown has suggested that a tax on the gambling sector could fund the scrapping of the two-child benefit cap, aiming to help alleviate poverty [7]. However, the full market response to these proposed tax hikes remains uncertain, with some fearing potential decreases in overall tax revenue due to a "Laffer curve" effect [2].
In public and industry opinion, there is debate. Some advocate for higher taxes as necessary for public service funding and social welfare, while others warn such tax increases could stifle innovation and investment in the sector [4]. This reflects an active policy debate with proposals under consideration rather than finalized legislation.
| Aspect | Current Position / Impact | |-----------------------------|--------------------------------------------------------| | Government stance | Considering large tax increases on gambling duties (Remote Gaming up to 50%, etc.)[1][2] | | Purpose | Raise billions for social programs and address gambling harms[1][2] | | Impact on operators like Entain | Increased costs, reduced profits; uncertainty about tax revenue due to potential market reactions[1][2] | | Industry/public reaction | Mixed; some support raising taxes, others warn of harms to investment and innovation[4] |
- In response to the UK government's proposal to increase gambling taxes, particularly in the online sector, some industry experts are concerned that significant cost increases for operators like Entain may lead to lowered profits and uncertainty about future tax revenue.
- With the debate about increased gambling taxes heating up, former prime minister Gordon Brown has suggested that a tax on the sector could potentially fund social programs and help alleviate poverty, while some in the industry fear such tax hikes could stifle investment and innovation.
