UK Gambling Tax Plan Just a Trojan Horse: Betting and Gaming Council

Posted on: November 28, 2023, 02:39h. 

Last updated on: November 29, 2023, 10:12h.

Erik Gibbs Read More
Expertise: Asia Pacific Gaming, Gaming Business, Global Gaming.

If a new tax plan the UK Treasury devised for the gambling industry moves forward, it would be another blow to horse racing. The Betting and Gaming Council (BGC) issued a warning about the plan on Monday, calling it nothing more than a “Trojan Horse.”

Frankie Dettori celebrates a win during the Royal Ascot
Frankie Dettori celebrates a win during the Royal Ascot. The UK Treasury’s plan to increase remote betting taxes could cripple the horse racing industry. (Image: LiveScore)

At the heart of the issue is the possibility of a tax increase on all remote betting. The UK government hinted at the change last week when it released its Autumn Statement, one of two mini-budgets the Treasury prepares annually.

The Treasury suggests that a single tax on remote betting may be necessary. Currently, the sports betting tax is 15% of profits. The remote gaming tax is 21%.?

The remote gaming tax covers casino gambling offered over the Internet, telephone, TV, and radio. However, the BGC believes the government will use its power to raise the remote betting tax to the same level.

“There are genuine fears that any so-called simplification of the current tax structure will be nothing more than a Trojan Horse to further raise taxes on businesses,” said BGC CEO Michael Dugher.

Effects on Horse Racing

The plan could be particularly devastating to the horse racing segment, which is experiencing declining participation and revenue. From 2007 to 2018, the UK population’s participation in bets on the Royal Ascot, the Grand National, and other races fell from 17% to 10%.

The introduction of affordability checks and new mandatory responsible gambling taxes are putting pressure on operators and players. Another 6% tax increase could seriously cripple horse racing, which relies almost completely on taxes for its survival.

The lack of collaboration between the Treasury and the gaming industry is straining the matter more. There was no discussion of the proposed tax changes before the Autumn Statement, nor was there any input from the Department for Culture, Media and Sport (DCMS), which oversees the gaming ecosystem.

Earlier this year, Paul Scully, then the head of the DCMS, promised that the government would discuss any betting tax changes with the industry. He said this would guarantee that the “benefits of the horserace betting levy are maximized” for the horse racing segment. Scully was replaced a month later by Lucy Frazer.

Reaching the Breaking Point

The BGC asserted in its statement that 10K people in the gambling and betting ecosystem have been put out of work since 2019. This has been partly the result of COVID-19 but also because of the UK government and the Gambling Commission, both of which have sought to handicap the industry.

The regulated ecosystem is currently responsible for contributing around ￡4.2 billion (US$5.3 billion) in tax revenue to the government. Should the tax increase plan survive, it will mean less tax revenue, not more. This would be the result of an increase in black-market gambling, which is already on the rise in the UK.

The cost of live-streaming horse races is also skyrocketing, and operators must spend more money to maintain workable margins. Over the next two years, they could pay over 16% more, or roughly ￡30 million (US$37.84 million), just on streaming rights.

The BGC added that, according to a PWC study conducted by PwC, there has already been a significant jump in the use of unregulated online gaming sites. In just the past couple of years, the number has increased from 210K to 460K. A larger exodus is expected once the UK government implements all the planned restrictions.