Any change in taxation policy is a concern for businesses. The UK gambling industry is therefore wary about plans the Labour government has regarding reform of the way their businesses are taxed.
At present there is a three-rate system in operation for remote gambling. Remote Gambling Duty (RGD) is 21% on operator profit with Pool Betting Duty (PBD) is 15% of net stake receipts. Finally, there’s General Betting Duty (GBD) which is 15% of profits made. HM Revenue & Customs and the treasury have now proposed the introduction of what they are calling the Remote Betting & Gaming Duty (RBGD).
As often seems to be the case these days, there will be a 12-week consultation process. This will provide industry stakeholders the opportunity to give their input to what is being proposed and will close on 21 July.
It’s expected that the final proposals will then be announced in the autumn budget. The current aim of the planned changes is to simplify the tax system. It’s also intended that administrative costs incurred by operators will be reduced.
However, the UK gambling industry is concerned that the RBGD could result in higher amounts of tax having to be paid. One concern is that there will be an increase of 6% in the remote gambling tax rate to bring it level with the 21% RGD.
The CEO of the Betting and Gaming Council (BGC) is Grianne Hurst and she is worried about the possibility of tax increases. Her view is that if that was to happen, it would be a “self-defeating” move for the Labour government to introduce.
When the new government was elected last year, it seemed almost every statement they made spoke of the need to make the economy grow. Therefore, to now increase gambling taxes would be making “a mockery” of those plans, according to the CEO.
Hurst added that gambling reforms have already cost the sector over £1 billion in lost revenue. Tax increases would “not raise more money for the treasury.”
There is also concern about how taxation changes could affect the horse racing industry. Hurst believes that if GBD was increased to the same level as RGD, that would be “catastrophic” for the industry.
A British Horseracing Authority spokesperson has said that the consultation period will be helpful. They are worried that the planned tax changes would have “unintended consequences” for their financial situation.
How would the in-person gambling sector be affected by any changes? The proposals that have been released give plenty of mentions to the land-based venues having higher costs than those of their online counterparts. That is the case with utility and staff costs being higher in addition to maintaining buildings.
While the UK gambling industry has been flourishing in recent years, there is still the problem of unlicensed and unregulated gambling. An increasing number of people are now placing bets with what is called the black market. If there continues to be more restrictions placed on those gambling companies, including UK online casinos who are licensed, then this could cause more problems.
Recently, there have been new maximum stake limits imposed for online slot games. There are also stricter affordability checks on players. Moves such as this are unpopular with gamblers. The black market often sees large bonuses offered to players but the level of customer protection is nowhere near as high as seen in the licensed industry.
The growth of the black market is affecting not just the revenue for licensed gambling companies but also the amount the treasury receives in gambling taxes. The gambling charity Deal Me Out has recently said that the increased regulation of the industry is seeing more players exit licensed sites.
When the Conservatives were in power, there was talk of the online gambling tax rate climbing as high as 29%. There were concerns last year that increases were on the way when the new Labour government held their first budget. The gambling industry breathed a sigh of relief when the budget did not include any tax rises for the sector apart from for National Insurance.
Gambling company Entain recently held their Q1 earnings call. Their CEO Stella David stated that any changes may not take place until 2028. The CEO predicted there will be a “long journey” and “a lot can happen between now and then.”
It looks therefore like being more of a Grand National than a five-furlong sprint at Newmarket.
Taxation is always a worry though and several American states are also attempting to increase gambling tax rates.
Stricter regulation is on its way in the UK and this will include a mandatory gambling levy that aims to raise £100 million a year from the industry. The “long journey” spoken of by Stella David promises to be a fascinating one.
