Industry reaction to Labour avoiding raising UK gaming duties

As the Chancellor of the Exchequer Rachel Reeves’ time at the dispatch box in the House of Commons ticked by, it became clear something was amiss. The first Labour Budget since the late Alistair Darling’s in 2009 was coming and going without reference to the gambling sector. And after a Guardian report on 11 October spooked the market, it was assumed Reeves and her Treasury mandarins would take the easy win and hike taxes on the sector. It proved not to be the case.

The Guardian had claimed Reeves was mulling a tax raid, with a suggestion from the Institute for Public Policy Research (IPPR) to ramp remote gaming duty from 21% to 50% and double general betting duty to 15%. The Social Market Foundation had pointed to raising remote gaming duty to 42% to drive £900m to state coffers.

However, as tobacco and vaping were hit with new duties, gambling remained unushered in the House of Commons. Two bullet points in Reeves’ 168-page budget note a consultation on taking the three-tax structure into a single tax will begin next year. An idea her predecessor Jeremy Hunt proposed in his Autumn Statement last year. As well as the consultation, Gross Gaming Yield (GGY) bandings for gaming duty will be frozen from 1 April 2025 until 31 March 2026.

So, while Labour sets about raising taxes by £40bn, the gambling sector managed to dodge disaster. The market reacted well, with London-listed operators’ shares spiking. It is to be seen if changes to National Insurance will impact businesses, with employees required to pay 15% from next April.

Here, EGR lays out the thoughts from key players and stakeholders in the sector in what was a whirlwind day in Westminster.

Lawyers

Melanie Ellis, partner at Northridge Law

“The Budget will be a huge relief for gambling operators, despite some pain for British businesses from rises in National Insurance and capital gains tax.  The risk that gambling duty rises would damage the ability of licensed operators to compete with the black market may have factored strongly in the Chancellor’s decision to set her sights elsewhere.

 “An increase in taxes for remote operators may still be on the agenda however, with the budget setting out a proposal to consult next year on a single tax for all remote gambling, in place of the current ‘three-tax structure’.  A consultation on this topic was originally announced by the previous government in Autumn 2023, so this is not a new idea. 

“The outcome of this won’t necessarily be that duty rates for remote betting will be increased to 21% to match remote gaming duty, however, as the consultation will provide an opportunity for gambling businesses to submit evidence as to the consequences of such a change.

 “It’s also worth noting that, in real terms, the tax burden for land-based casinos has been increasing since 2022 and will continue to do so, due to the ongoing freeze in the rate bands despite significant rates of inflation.  This might be more palatable if the government were simultaneously proceeding with planned reforms including increased gaming machine allowances, but so far these appear to be on the back burner.”

Zoe Feller, partner at Bird & Bird

“The gambling industry expressed a collective sigh of relief after Rachel Reeves didn’t mention gambling at all throughout her maiden 75-minute budget speech. However, there will be a sense of déjà vu at looking at the detailed announcements on gambling duty reforms which repeats exactly what was published in the Autumn Budget 2023.

“In short, the government still plans to consult on bringing remote gambling into a single tax, rather than its current three-tax structure. Uncertainty therefore continues for the gambling industry including the prospect of general betting and pool betting duties being increased in line with higher remote gaming duty rates.

“The sector will also be affected by the increases to employer NICs and other tax rises, which may push more operators to cheaper offshore locations.”

Richard Williams, gambling partner at Keystone Law

“The gambling industry in Great Britain will be breathing a sigh of relief after gambling taxes were left unchanged in Rachel Reeves’ first Budget. 

“However, anti-gambling groups, including the think tanks the IPPR and the Social Market Foundation will be disappointed that their recommendations to increase duty on ‘higher harm’ products, such as online casino games, were not accepted by the Chancellor. 

“Treasury officials were reportedly considering a tax raid of up to £3bn on the gambling sector to plug a £22bn black hole in the nation’s finances.  The Social Market Foundation published a report on 15 October 2024, showing that over 50% of Britons believed the government should increase the tax on online gambling and argued that remote gaming duty should be increased from 21% to 42%, which would have brought in an extra £900m to the Exchequer.

“As it turned out, whilst the Autumn Budget did increase some ‘sin taxes’, including increased tobacco duty and a new duty on vaping liquid, all forms of gambling duty were left untouched.  The only references to gambling in the Budget state that ‘the government will consult next year on proposals to bring remote gambling into a single tax, rather than taxing it through a three-tax structure’ and that Gross Gambling Yield (GGY) bandings for gaming duty were frozen for 2025-2026. 

“In light of these proposals, it appears that remote gambling duty will be merged into a single tax in due course and at a single rate. On the basis that the 21% rate of remote gaming duty is unlikely to be reduced, the most likely outcome is that remote betting/pool betting duty will be also increased to 21% of GGY in the not-too-distant future. 

“So, 2025 is likely to be negative for the remote gambling industry, but for now, the feared duty increases have not materialised.” 

Chris Elliott, partner at Wiggin

“The online industry will be breathing a small sigh of relief given the widely held view that duties would increase (including my own), though it may be a short reprieve given plans announced to launch a future consultation on reform of online gambling taxes.

“The move is sensible given the online industry is already likely to face the most significant impact of the white paper proposals, with the government’s own estimates indicating that the overall impact of the changes (as a % of online GGY) once fully implemented could be as much as -13.9%.

Operators and affiliates

A Kindred Group spokesperson

“Kindred welcomes the government’s decision not to increase gambling duties. It is important that the regulated betting sector in the UK has certainty and clarity about the tax regime in the coming years – so [the] decision not to hike duties is important. We also look forward to seeing the detail of the proposals for a single tax to be released next year.”

Anthony Kaminskas, AK Bets CEO

“Great to see the Labour government recognising the UK gambling industry is highly regulated and highly taxed and the 22.5 million customers who play safely and responsibly aren’t further shunted towards illegal markets by operators absorbing yet more tax.

“Problem gambling rates will never be zero but legislators working with legal operators to help reduce harm is the way forward.

“Our own view is that services such as GamStop shouldn’t just be a blocker for customers. The data captured should be used to help pinpoint those experiencing problems and the industry tax revenue generated directed at their treatment.

“Don’t penalise the 22.5 million with one-size-fits-all policy. Derek Webb’s ROI from lobbying against the legalised gambling industry isn’t looking great. A good day for the legalised industry. A bad day for useful idiots with agendas.”

Richard Moffat, OLBG CEO

“We were initially worried about the rise in remote gaming duty rumours, as operators would likely have swallowed these costs by rolling out worse products, worse pricing and fewer offers for gambling consumers. When this happens, punters consider switching to the black market, where friction is lower because player protection is non-existent, and taxes are not always being paid. 

“The new Labour government has avoided this scenario by keeping tax rates consistent, which will come as a relief to many businesses in the sector that were preparing for the worst, and is ultimately great news for the consumer.

“The British horseracing industry will also breathe a sigh of relief as any increase in taxes may well have hit their income at a time when many stakeholders are in need of revenue growth.”

Governing and trade bodies

Grainne Hurst, Betting and Gaming Council CEO

“We welcome [the] 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.”

Greg Swift, director of communications and corporate affairs at the British Horseracing Authority

“The Treasury’s decision to not increase gambling duties at this time is welcome given the potential impact on racing’s finances and its workforce. We will now work with the government on next year’s consultation on gambling duties to ensure that racing’s position is fully understood. 

“We will also closely examine the potential impact that the increase in employers’ National Insurance Contributions (NICs) to 15% may have on the racing industry.  

“Combined with the lowering of the level at which employers are required to make NICs payments it is reasonable to assume that this will affect hundreds of racing businesses across Britain. 

“With the economic headwinds currently being experienced by British racing, these extra costs on small businesses already operating on tight margins risk causing significant damage to Britain’s rural and racing communities.”

Reformists

James Noyes, senior fellow at the Social Market Foundation

“The online gambling industry has been undertaxed for years. Following the recent white paper, there was an opportunity for the Chancellor to address loopholes in the tax system that the gambling industry has for too long exploited. It is regrettable that the Chancellor has chosen to place the profits of the industry over the wider wellbeing of British society.”

Lord Foster of Bath, chair of Peers for Gambling Reform

“Online gambling has for too long been undertaxed in the UK. British remote gaming duty tax rates of 21% are lower than those in many other countries – in some European markets, tax on remote slots is closer to 40%, and in some US states it is over 50%.

“The government appears to be sensibly planning to simplify the tax regime for online gambling but without any indication it plans to increase the total tax take.

“This is a missed opportunity to signal plans to bring the UK in line with other countries and to ensure appropriate funds are raised from online casino gambling given the vast costs of harm created by the sector.”