On 7 November, the UK Parliament’s Treasury Committee unveiled a report urging the government to refine its approach to gambling taxation. The committee specifically recommended distinguishing between land-based gambling and the more addictive online gambling sectors and suggested imposing higher taxes on “higher-risk” verticals. These recommendations followed an inquiry in October into proposed increases in gambling tax and are intended to guide the government ahead of the autumn budget announcement on 26 November.
The committee emphasized the need for the government to consider the different levels of harm caused by various types of gambling. It insisted that the Treasury should ensure Remote Gaming Duty and Machine Gaming Duty remain higher than Gaming Duty, reflecting the potential risks involved. The report stated that different gambling forms inflict varying degrees of harm on individuals, families, and society. It noted that the existing Treasury policy does not adequately capture the disparate nature of these harms.
The committee expressed skepticism about the gambling industry’s warnings of negative consequences from increased taxes. They advised the government to resist industry pressure and implement tax rates on online betting games that correspond to the harm they cause. As supported by the inquiry, the risks associated with gambling differ significantly across verticals. The committee argued that current policy inadequately addresses the harms generated by online casinos and suggested a sharper differentiation between traditional land-based gambling and online platforms.
During the inquiry, Stewart Kenny, co-founder of Paddy Power and a former industry executive, urged basing tax rates on the level of harm associated with each gambling vertical. He pointed out that betting on activities like horse racing or general elections is typically less harmful than engaging with fixed-odds betting terminals or online slots. According to Kenny, two key indicators of a product’s addictiveness are the speed between investment and result, and the frequency of repeated bets.
A significant concern highlighted in the report is the potential impact of increased taxation on the black market. The committee urged the government to explore new strategies to address this issue, suggesting a review of anti-avoidance measures to prevent player migration. Dame Meg Hillier, chair of the committee, reiterated the severe effects of addictive online betting on lives and communities, stressing the need for effective regulation.
The committee also evaluated the gambling sector’s claim that higher UK gambling taxes may push players towards black market alternatives, where offerings and odds are unaffected by higher tax rates. While acknowledging a report by the Betting & Gaming Council warning of a potential £3.1 billion economic loss, the committee questioned its impartiality, considering its funding by the gambling industry. Furthermore, they referenced a study in the ‘Harm Reduction Journal,’ which suggested that taxing gambling would not significantly redirect consumption to offshore markets.
Stewart Kenny, reflecting on past campaigns, downplayed the black market threats during his panel session, likening them to previous scaremongering tactics used in industry campaigns. He recalled similar warnings about job losses and shop closures during the introduction of fixed-odds betting terminal legislation, which did not materialize.
The debate surrounding a potential increase in UK gambling tax began in April when the Treasury initiated a consultation to consider a single tax rate for all remote gambling activities. This proposal would replace the current three-tiered tax rate. By August, the Institute for Public Policy Research (IPPR) recommended that the government increase the remote gaming duty from 21% to 50% and the machine games duty from 20% to 50%. These changes were projected to generate an additional £3 billion annually in tax revenue.
Growing support for gambling tax reforms has emerged since, with over 100 Labour MPs backing a rate increase to 50%. Chancellor Rachel Reeves has expressed that the gambling industry must contribute its fair share of taxes. In a September interview with ITV, Reeves mentioned that she personally does not gamble but acknowledged the industry’s economic contributions. However, she emphasized the necessity for the industry to meet its tax obligations.
Overall, the Treasury Committee’s report calls for a nuanced approach to gambling taxation, one that reflects the varying levels of harm caused by different gambling platforms. As the debate continues, the government is faced with the challenge of balancing revenue generation with the need to protect individuals and communities from the adverse effects of gambling.
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