Concerns raised over potential UK remote gaming tax rate reform
Gambling stakeholders express skepticism regarding the UK government’s plans to overhaul remote gambling taxation.
The UK gambling industry has reacted with caution to recent proposals for tax reform that could potentially increase the financial burden on operators. The government’s intent to consolidate the existing three-rate system into a single Remote Betting & Gaming Duty (RBGD) has raised concerns among stakeholders about the implications for taxation and growth within the sector.
HM Revenue & Customs and the Treasury announced their call for industry feedback on Monday, initiating a 12-week consultation period that will conclude on July 21. Their objective is to simplify the current tax structure, ostensibly reducing administrative costs for businesses. However, the government’s willingness to increase taxes remains a contentious issue.
Current UK Gambling Tax Structure
At present, the UK gambling sector operates under three separate tax rates:
- Remote Gaming Duty (RGD): 21% of operator profits
- General Betting Duty (GBD): 15% of profits
- Pool Betting Duty (PBD): 15% of net stake receipts
Industry professionals are particularly concerned that the proposed reform may increase the betting tax rate by 6% to align with the RGD. This possible adjustment has been criticized by Grainne Hurst, CEO of the Betting and Gaming Council (BGC), who argues that any hikes in taxation would undermine the government’s growth strategy.
Hurst stated, “An increase in taxes for our members, following a white paper that has already cost the sector over £1 billion in lost revenue, will not benefit the Treasury.” Additionally, she emphasized that raising the GBD to match the RGD could significantly harm the financial stability of the racing industry.
A spokesperson for the British Horseracing Authority welcomed the chance to participate in the consultation but cautioned that tax harmonization could lead to unintended negative consequences for the sector’s finances.
Potential Tax Increases: A Concern for the UK Betting Sector
Moreover, questions have arisen regarding possible favoritism toward on-premises gambling establishments. The proposal documentation indicates that retail casinos face higher operational costs compared to their online counterparts, including expenses for facility maintenance and staffing. This perceived bias could further complicate the industry’s financial landscape.
Gambling consultant Steve Donoughue highlighted the risk of increased migration toward black market options, asserting that restrictive legal conditions may push players to seek more competitive offshore deals. His concerns were echoed by the gambling charity Deal Me Out, which reported a growing trend of UK gamblers being driven into the black market due to escalating constraints on licensed offerings.
Donoughue warned that the Treasury might exploit the tax reform as a means to bolster its revenue. He stated, “Anyone who thinks this will provide an opportunity for the Treasury to cap all gambling taxes around 15% is misguided. Ten years ago, the Treasury suggested they could tax online gambling as high as 29% without driving customers to the black market, which indicates the new rate could be similarly elevated.”
Concerns Over Growth Estimates in UK Gambling
The Treasury has projected the gross gambling yield (GGY) for the UK at £15.6 billion annually, with approximately £3.4 billion collected in excise duties. However, Dan Waugh, a partner at Regulus Partners, argued that the government may have overestimated the growth of remote gambling, characterizing the mentioned 208% increase from 2014 to 2024 as potentially misleading.
Waugh explained that this figure does not take into account the transition from Point of Supply to Point of Consumption licensing, which came into effect in November 2014. This shift means that many operators did not report their GGY to the Gambling Commission during this transition period, casting doubt on the accuracy of the Treasury’s projections. He noted that a more realistic growth assessment for online sports betting is around 36% based on commission statistics from 2015 to 2024.
Industry Perspectives on Future Tax Changes
During a recent earnings call, Entain’s CEO Stella David offered a tempered view regarding the timeline for significant tax changes. She indicated that due to the extensive legal processes required for implementing a new system, meaningful alterations are unlikely before 2028.
“The journey ahead is lengthy. Given the necessary consultations and legislative adjustments, the earliest we expect to see changes is late 2027 or early 2028. Many factors could influence this timeline, and it’s premature to anticipate immediate updates,” David stated.
