UK government avoids raising remote gaming or betting duty in Autumn Budget

The UK online gambling sector breathed a collective sigh of relief after the government didn’t announce an increase in duty licensed operators pay on their profits.

It had been anticipated that the Chancellor for the Exchequer, Rachel Reeves, would raise either remote gaming duty, or remote betting duty, or both as the Labour government grapples with fiscal ‘black hole’ it suggests amounts to £22bn.

However, it has subsequently been announced that the government will consult next year on proposals to bring remote gambling into a single tax rather than it’s current three-tax structure.

The aim is to “simplify, future-proof and close loopholes in the system”, the government said.

Labour’s plans mirror those of the previous Conservative government as former Chancellor Jeremy Hunt laid out identical plans in his Autumn Statement last year.

As Reeves speech progressed at the dispatch box, investors reacted positively to the lack of mention of tax hikes for the sector. Evoke’s shares spiked at much as 10%, rising to 59p while Flutter’s stock was up 8.5% to 18,700p.

Rank Group and Entain stock also rose, with the latter up around 6% to 90p and Entain jumping 8% to 770p. However, Rank’s, Entain’s and Flutter’s shares have since dipped, albeit still up by mid-single digits on the day.

Evoke’s stock is still up by more than 11% at the time of writing.

Remote gaming duty was last raised in 2019 – from 15% to 21% – an increase designed to offset any lost tax revenue from the slashing of the maximum stakes on fixed-odds betting terminals (FOBTs) in betting shops from £100 to £2 per spin.

Online sports betting and pool betting were both held at 15% in 2019, although the previous Conservative government revealed in its 2023 Autumn Statement there would be consultations on harmonising remote gambling tax rates.

Prior to the Autumn Budget, the Betting and Gaming Council (BGC) had been vocal in its opposition to any tax rises, warning it would “slam the breaks on growth” threaten jobs and “completely derail the horseracing industry”.  

The trade body has also argued it would give a leg up to the “lurking menace of the black market”, with a recent study carried out by Frontier Economics on the BGC’s behalf suggesting Britons stake up to £2.7bn a year with unlicensed online operators.

According to the latest statistics from the Gambling Commission for April 2022 to March 2023, Britain’s online betting, casino and bingo sector generated £6.5bn in gross gambling yield, which was a 2.8% increase on the prior period.

Last year, the Treasury collected gaming taxes totalling £3.3bn, or £2.2bn if excluding The National Lottery.

The industry had been anticipating an announcement in today’s Autumn Budget, after a report by The Guardian earlier this month suggested the government was mulling a £3bn tax raid on the gambling industry.

The story spooked the markets at the time, triggering a sharp sell-off in publicly traded operators with exposure to the UK.

Think tank the Institute for Public Policy Research (IPPR) to hike remote gaming duty to 50% and double general betting duty to 30%.

Another think tank, the Social Market Foundation (SMF), suggested online casino was “undertaxed” compared to other sectors and countries and that remote gaming duty should double to 42%.

The SMF said tax on digital gaming raises around £900m a year for state coffers. Doubling the rate could boost tax revenue by £550m, when taking into account reduced activity resulting from additional costs being passed onto the consumer, the think tank claimed.

As well as being an easy lever for the government to pull, a Survation poll commissioned for the SMF report, published on 15 October, found more than half of respondents supported the government increasing taxes on online gambling.

The UK’s three-tax structure was taxed relatively low compared to other jurisdictions.

While online gaming duty is lower in markets like Spain (20%), Latvia (13%) and Estonia (12%), operators in Czechia and Greece pay 38% and 35%, respectively, while in the US, Pennsylvania taxes online slots specifically at 54% of gross gambling revenue (GGR).

What’s more, Sweden upped its tax rate across all verticals from 18% to 22% in July, while the right-wing coalition in the Netherlands has approved raising the rate on GGR from 30.5% to 37.8% in two phases from 2025.

The UK industry will have to wait and see whether the Labour government decides to increase the tax burden on the online industry during its term in office.

Betting and Gaming Council CEO Grainne Hurst, said: “We welcome today’s budget and its commitment to not increase gambling duties on the regulated betting and gaming sector.

“We have been clear, any duty rises now would have hit customers, prevented growth, risked jobs and bolstered the unsafe, unregulated gambling black market.

“Government has listened to the BGC and our members, got the balance right, and rejected calls from anti-gambling prohibitionists seeking to threaten jobs and growth.

“With policy for the sector already set, our members can look to support the government’s ambitious growth agenda, generating tax, jobs and investment across the nation while continuing to support sports like horseracing.

“While there have been no rises in gambling duties, we will study the impact that increased Employers’ National Insurance Contributions will have on BGC members, particularly smaller operators like independent bookmakers and land-based leisure operators, like casinos.”