Increased gambling taxes in the UK may see betting customers ultimately footing the bill
In the realm of British politics, a proposed tax hike on sports betting operations has sparked concern among industry giants like Entain. The gambling operator, which employs over 100,000 people in the UK and contributes significantly to the country's treasury, has voiced its opposition to a rapid increase in sports betting tax rates.
Rob Wood, Entain's Chief Financial Officer, has emphasised the company's substantial contribution to the UK Treasury, with Entain paying over half a billion pounds annually. However, he has also highlighted the slimmer profit margins in sports betting operations compared to iGaming counterparts, making a tax increase potentially detrimental.
Entain's warning is not unfounded. The Netherlands, which recently increased its gambling tax from 15% to 29%, is now facing a potential loss of €200m in tax revenue throughout 2025 alone. This experience serves as a cautionary tale for the UK, with Wood citing it as an example of how tax increases could lead to unwanted consequences, such as businesses taking measures to mitigate the impact, which would not benefit betting platforms or punters.
One such consequence could be an economic hit for the horseracing industry. Economic analysis suggests a potential loss of £330 million over five years, with 2,752 jobs at risk in the first year. The industry fears that reduced sponsorship and promotion from bookmakers could lead to decreased interest in the sport.
Moreover, higher taxes may drive punters to unregulated, black market platforms. This could further erode the regulated sector's market share and undermine safer gambling initiatives. In the UK, an estimated 1.5 million people already engage with unregulated markets, a figure that could increase if taxes rise.
The betting industry is a crucial source of funding for British sports, contributing £350 million annually to horseracing and millions more to other sports. Increased taxes could reduce this investment, impacting the financial sustainability of these sports.
The Dutch Gambling Authority has acknowledged that a recent tax increase had backfired and was at odds with its stated goal of protecting consumers. This could drive players offshore or offer worse options at home. Faced with tougher operating conditions, gambling operators, like Entain, would offer worse odds to ensure they stay sustainable.
In conclusion, while tax increases can generate more government revenue in the short term, they may lead to longer-term economic and regulatory challenges for the gambling industry and its associated sports. As Entain argues, such a tax increase would suppress the regulated market and drive players offshore, potentially leading to increased participation in unregulated, less safe gambling activities.
[1] Source: Racing Post [2] Source: Dutch Gambling Authority [3] Source: Gambling Commission [4] Source: Betting and Gaming Council
- The gambling industry, with Entain as one example, contends that a higher tax on sports betting could lead to slimmer profit margins and potentially be detrimental to their businesses.
- The Netherlands, after increasing its gambling tax to 29%, may lose €200m in tax revenue by 2025, serving as a cautionary tale for the UK.
- If taxes on sports betting increase, the horseracing industry might suffer a potential loss of £330 million over five years, and up to 2,752 jobs could be at risk in the first year.
- Rising taxes may drive punters towards unregulated, black market platforms, reducing the regulated sector's market share and jeopardizing safer gambling initiatives, such as those supported by the UK's Gambling Commission.
