Key Moments:
- The Treasury Committee has called for stricter tax distinctions between land-based and online gambling forms
- Recommendations were made to increase taxes on higher-risk gambling, citing greater societal harm from online platforms
- Potential tax hikes could raise up to £3 billion annually if rates for Remote Gaming and Machine Games Duties are significantly increased
Calls for Policy Adjustments in Gambling Tax
The UK Parliament’s Treasury Committee has recommended that the government intensify the distinction between taxation for land-based gambling venues and online gambling platforms, describing the latter as more addictive and higher-risk. This recommendation is part of a report released on November 7, following an inquiry carried out in October, and is poised to influence key decisions in the lead-up to the Autumn Budget on November 26.
The report stated, “Different forms of gambling cause varying levels of harm to individuals, families, and society,” and expressed doubts that current tax policy adequately reflects these varying levels. The committee is pressing the government to withstand industry pushback and to calibrate tax rates for online betting games to match the degree of harm they may cause.
Varied Risks Associated with Gambling Types
The committee’s findings indicated that the current tax approach does not adequately account for the differing levels of harm posed by various gambling products, with particular concern for online casinos. The report urged the government to further distinguish between gambling conducted at physical locations, such as horse racing tracks or arcades, and online games that encourage frequent, potentially harmful wagering behaviors.
Stewart Kenny, co-founder of Paddy Power, contributed to the discussion by arguing that each gambling vertical should have its tax rate correlate with the product’s potential for harm. He highlighted the distinction, saying, “If there is only one message that I get through to you, it is that betting on horse racing or betting on the next general election is less harmful than betting on fixed-odds betting terminals or online slots, mainly.” He further discussed how the speed of play and the frequency of possible bets contribute to addictiveness.
Addressing Black Market Risks
The committee also acknowledged the risk that higher taxes might drive players to unregulated gambling platforms and advised reviewing anti-avoidance strategies to minimize this threat. Dame Meg Hillier, chair of the committee, emphasized the negative impacts of online betting on individuals and communities, stating, “For too many people, the highly addictive and harmful nature of online betting games has seriously impacted their lives and the lives of those around them.”
While the industry has warned about possible revenue loss, the report flagged potential bias in these arguments. Stewart Kenny pushed back on such concerns, stating, “When I campaigned for the gambling industry, I always used to talk about black markets and job losses. We saw it again when the FOBT legislation was brought in: ‘Oh, this will close all the shops,’ but it didn’t. It is a bit of scaremongering.”
Potential Impact of Tax Increases
The issue surfaced in April after a Treasury consultation on implementing a single tax rate for remote gambling. Later, in August, the IPPR recommended raising the Remote Gaming Duty from 21% to 50% and Machine Games Duty from 20% to 50%, proposals that could generate as much as £3 billion every year.
Chancellor Rachel Reeves weighed in on the debate, saying, “I do think there’s a case for gambling firms paying more. On a personal level, I’ve never bet in my life. They make an important contribution to the economy, but they should pay their fair share of taxes. We’ll make sure that happens.”
Summary Table: Proposed and Current Gambling Duties
| Tax Type | Current Rate | Proposed Rate | Potential Additional Annual Revenue |
|---|---|---|---|
| Remote Gaming Duty | 21% | 50% | £3 billion |
| Machine Games Duty | 20% | 50% |
- Author
Daniel Williams
