British gambling companies suffer £3 billion loss amidst discussions about a tax increase
In a significant development, leading think tanks, including the Institute for Public Policy Research and the Social Market Foundation, have proposed increasing taxes on "higher harm" products within the gambling industry. This move, if implemented, could have a profound impact on the value of UK gambling stocks.
The proposals suggest a doubling of taxes for online gambling companies and a significant increase in taxes for online casino games. The Social Market Foundation has also proposed doubling the tax on online gambling companies. The German Economic Institute (Institut der deutschen Wirtschaft, IW) has made similar proposals in a report.
The revelations, reported in The Guardian, have caused significant volatility in the UK gambling stock market. On Monday, Entain fell by 14% when the UK index FTSE opened, and Evoke experienced a 12% drop in value. Flutter Entertainment, a company listed on the New York Stock Exchange, also saw a 9% decline on Friday due to the report.
Jefferies, a financial services group, has expressed concern that the proposed tax hikes could have severe consequences for listed operators in the gambling industry. They question the likelihood of such severe tax hikes, stating they could "effectively wipe out listed operator profitability." Jefferies also suggests that the proposed tax hikes could pose an existential threat to many smaller operators.
The proposed tax increases could be a response to concerns about the harm caused by gambling products. The Institute for Public Policy Research, however, has urged more than doubling taxes on "higher harm" products such as online casino games, but has suggested exemptions for items such as lotteries and bingo from the proposed tax hikes.
Chancellor Rachel Reeves is under pressure from these leading think tanks to increase taxes on the betting industry. The UK government is considering hefty tax hikes on gambling operators, but no official announcement has been made yet.
This news has sent shockwaves through the gambling industry, with operators bracing for potential changes in the near future. As the situation unfolds, it remains to be seen how the UK government will respond to these proposals and what impact they will have on the gambling sector.
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