Flutter CEO: Hiking tax rates on industry is “in no one’s interest”
Peter Jackson implores UK and US states against not to raise taxes or risk losing players to illegal operators, as fallout from Guardian report continues to impact the sector
Flutter CEO Peter Jackson has warned the UK and US states that raising gambling taxes only benefits illegal operators as players will be left with no option but to turn to the black market.
Jackson’s concerns come after a Guardian report last week claimed the UK’s Labour government is considering raising remote gaming duty, or online casino taxes, from 21% to 50%.
The news saw Flutter’s shares fall 8% in New York on Friday afternoon (October 11) after the story was published. When the markets opened in London after the weekend, Flutter’s UK-listed shares, along with Entain, evoke, and Rank Group, were all hit by sell-offs.
Speaking to the Financial Times, Jackson warned US states considering raising duties would result in tax dollars decreasing as people turn to illegal operators.
New York currently has the highest tax rate in a commercial US market at 51%, while New Jersey Senator John McKeon has proposed doubling the tax rate on sports betting and icasino to 30%.
New Hampshire also has a 51% tax rate, although DraftKings essentially holds a monopoly there, while Pennsylvania is at 36%.
Illinois scrapped its 15% flat rate in July to introduce a sliding scale from 20% to 40% based on operators’ annual revenue. DraftKings and Flutter-owned FanDuel are the only two firms large enough to be caught in the 40% bracket.
DraftKings had planned to introduce a customer surcharge gaming tax to alleviate the tax burden in high tax states, but pulled the idea after two weeks as fellow operators failed to follow its lead and customer feedback.
Jackson said: “If you push taxes too high, then people […] will use illegal operators and tax revenues [will] go down.”
He added: “If the [US] states are genuinely trying to maximise their tax revenues, they should be very thoughtful about pushing the tax rates up.”
The Flutter CEO also pointed out that for larger operators, higher tax rates are something they could manage better than smaller operators.
For example, he noted smaller operators would be left with no choice but to raise prices and spend less on marketing, which would lead to players switching to larger platforms.
Higher tax rates “serve the larger players better [than smaller ones],” Jackson explained. “As we’ve got more levers we can pull to help mitigate them.”
Taking to LinkedIn, the CEO reiterated his stance on higher tax rates as he laid out the same foreboding warnings to the UK as he did to the US in the Financial Times.
Jackson wrote: “As one of the fastest-growing listed companies in the UK, Flutter Entertainment ’s recent period of success demonstrates the importance of getting regulation and fiscal policy right to achieve these dual aims.
“Taking the two separately, I very much agreed with comments made by former Google CEO Eric Schmidt that UK regulation must be streamlined and implemented at a greater pace under Labour.
“Consistency around fiscal policy is also paramount as it allows businesses like ours to invest with more confidence.
“With plenty of speculation around the taxation of our sector this week, it was perhaps timely that I warned of the unintended consequences of high taxes in an interview with the Financial Times, published today.
“While my comments about balance were in relation to the US, the point can also be applied to the UK operating environment and elsewhere – setting too high a tax rate reduces competition, weakens the consumer offering, and can lead to a reduction in tax revenue. This is in no one’s interest.”