A new report commissioned by the Betting and Gaming Council (BGC), conducted by Ernst & Young (EY), suggests that proposed new gambling tax rate rises would cause a massive loss of jobs in the UK while pushing more players towards black market gambling, leading to a substantial loss to the UK economy and both the land-based and online casinos as well as the betting industry as a whole.
The proposed UK gambling tax changes
Earlier this year, the Institute for Public Policy Research (IPPR) published a report suggesting the Chancellor could raise up to £3.2bn a year by increasing gambling taxes.
Specifically, the report suggested increasing the remote gambling duty from 21% to 50% while increasing the duty on cash prize slot machines to a similar level. It also pointed to the possible doubling of General Betting Duty, from 15% to 30%, paid on sports betting activities.
The report findings gained further traction when former Prime Minister Gordon Brown suggested the funds could be used to lift the two-child benefit cap.
Although the Chancellor has not confirmed the proposed rises, she said in an interview with ITV that gambling firms “should pay their fair share of taxes and we will make sure that happens“.
The betting industry’s rallying cry
Betting firms have railed against the proposals. The BGC initially described the plans as “economically reckless” and, as the calls for increases have intensified, so too have the rallying cries of the betting industry.
Evoke has said up to 200 of its William Hill betting shops would be forced to close, while Betfred founder, Fred Done, went one further, stating that all 1,287 Betfred betting shops could close if the proposals were to go ahead.
The BGC, which represents more than 90% of licensed betting shops and gambling organisations in the UK, has continued to voice its opposition to the plans. Recently, it commissioned EY to undertake an analysis of how it believes the proposed changes would affect the industry, gamblers, and the economy as a whole.
The EY report suggests that hikes of the magnitude suggested by the IPPR could potentially decimate the UK betting industry, forcing otherwise legitimate players to turn to the unregulated black market and hurting the economy.
The report highlights a loss of 40,000 jobs in the industry as well as the channelling of £8.4bn of stakes into the black market. According to the report, betting companies operating with higher tax liabilities would be forced to offer shorter odds and less favourable deals, whereas black market businesses would not be liable to these same increases in overheads, effectively resulting in punters moving to unregulated sites to find the best deals.
Further, the report also indicates that rather than the £3.2bn tax haul promised by the IPPR, it would only generate £1bn in additional taxes, which would be offset by a loss of jobs and reductions in corporation tax, National Insurance contributions, and other revenues.
BGC Chief Executive, Grainne Hurst, summed up the findings by saying: “It is now clear these further tax rises are a direct threat to British jobs and economic growth.
“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.“
