Unease arises in UK circles regarding potential modifications to the gaming tax rate in a remote context
Revised Article:
The UK gambling industry is buzzing with concerns about a possible hike in taxes following a proposed tax reform.
Last week, HM Revenue & Customs and the Treasury unveiled plans to merge the current three-tier remote gambling tax system into a single tax, dubbed the Remote Betting & Gaming Duty (RBGD). This shakeup aims to streamline the tax structure and slash administrative costs for operators.
The proposal is open to public feedback through a 12-week-long consultation process ending on July 21st. The government is scheduled to unveil its final plans during the Autumn Budget 2025.
Current Gambling Tax Rates in the UK
The UK currently has three tax rates in place: Remote Gaming Duty (RGD) at 21% of operator profit, General Betting Duty (GBD) at 15% of profit, and Pool Betting Duty (PBD) at 15% of net stake receipts. However, there are issues brewing: some fear the remote gambling tax rate for betting could increase by 6%, aligning it with the current RGD.
Responding to the announcement, Betting and Gaming Council (BGC) CEO Grainne Hurst stated that any additional taxes, particularly so soon after a White Paper costing the sector over a billion in lost revenue, would be a counterproductive move by the government—one that undermines its growth strategy. Furthermore, increasing GBD to the same level as RGD might have dire consequences for the racing industry's finances, Hurst added.
A British Horseracing Authority spokesperson conveyed similar concerns, expressing apprehension that tax harmonization could lead to unforeseeable financial implications for the sector.
The Gambling Sector Bracing for Higher Taxes?
Some observers speculate the government may be preparing to favor on-premises gambling sites, given the proposal documentation's reference to a higher cost structure for retail and on-premises casinos compared to online operators.
Gambling consultant Steve Donoughue pointed out that the black market would likely be the ultimate decider of future tax rates. He believes that growing restrictions on licensed products could prompt an exodus of gamblers to offshore marketplaces seeking competitive pricing.
Last month, gambling charity Deal Me Out revealed UK gamblers were increasingly turning to the black market due to friction on licensed products. Donoughue also expressed concerns about a potential cash grab by the Treasury from the gambling sector.
"Anyone who thinks this would only result in an increment of taxes back to the original 15% is residing in cloud cuckoo land," Donoughue stated. "A decade ago, the Treasury believed you could tax online gambling at up to 29% without creating a black market, so the new rate might reach that high."
Regulus Partners Disputes UK Gambling Growth Estimates
In their consultation document, the Treasury estimated the UK's annual gross gaming yield (GGY) to be £15.6 billion, with the Exchequer pocketing approximately £3.4 billion in excise duties annually. However, Dan Waugh, partner at Regulus Partners, argued that the government might have miscalculated the rate of growth in remote gambling over the years.
"The calculation fails to consider that remote gambling licensing, and thus taxation, was based on Point of Supply until November 2014," Waugh explained. "As a result, seven months of the 2014-15 financial year were under PoS, and a significant number of operators were not reporting GGY to the Gambling Commission. Consequently, the 208% growth statistic is based on flawed comparison."
According to Waugh's estimate, the actual growth rate of online sports betting was a more realistic 36%.
Entain CEO: UK Gambling Tax Reform Is Years Away
During Entain's Q1 earnings call last Tuesday, CEO Stella David offered a more measured perspective on the news, noting that the reform was still in its infancy. She indicated that, given the lengthy legal process required to enact a new tax system, it was unlikely any changes would take effect before 2028.
"It's a long journey," David noted. "There's a consultation and legislation changes to consider, so the earliest we perceive any change occurring is late 2027 or early 2028. There's plenty that can happen between now and then. It's still surprisingly early days; nothing will happen in the short term."
- The UK gambling industry is discussing a potential increase in taxes based on a proposed tax reform.
- HM Revenue & Customs and the Treasury revealed plans to consolidate the current remote gambling tax system, creating the Remote Betting & Gaming Duty (RBGD).
- The RBGD aims to simplify the tax structure, reducing administrative costs for operators.
- The tax reform proposal is open to public feedback through a 12-week consultation process ending on July 21st.
- The government is expected to unveil its final plans during the Autumn Budget 2025.
- At present, the UK has three tax rates: Remote Gaming Duty (RGD) at 21%, General Betting Duty (GBD) at 15%, and Pool Betting Duty (PBD) at 15%.
- Some fear an increase in the remote gambling tax rate for betting, which could rise by 6%, aligning it with the current RGD.
- Grainne Hurst, CEO of the Betting and Gaming Council (BGC), expressed concerns about additional taxes undermining the government's growth strategy.
- Increasing GBD to the same level as RGD might have adverse effects on the racing industry's finances, as expressed by a British Horseracing Authority spokesperson.
- Some speculate the government may favor on-premises gambling sites due to a higher cost structure for retail and on-premises casinos compared to online operators in the proposal documentation.
- Steve Donoughue, a gambling consultant, suspects the black market will determine future tax rates.
- Donoughue fears that increasing restrictions on licensed products could drive gamblers to offshore marketplaces.
- Last month, gambling charity Deal Me Out reported that UK gamblers are increasingly turning to the black market.
- Dan Waugh, partner at Regulus Partners, challenged the government's estimate of the UK's annual gross gaming yield (GGY).
- Waugh insisted that the calculation failed to account for the 2014-15 financial year, during which seven months were based on Point of Supply.
- According to Waugh's estimate, the actual growth rate of online sports betting was 36%, not the previously reported 208%.
- Stella David, CEO of Entain, pointed out that the tax reform was in its early stages, and changes probably wouldn't be implemented before 2028.
- David noted that the reform's lengthy legal process could delay any changes until late 2027 or early 2028.
- The industry is closely monitoring the developments in the tax reform and its potential implications on the gambling sector.
- The financial and technology sectors (finance, banking-and-insurance, fintech, private-equity, venture-capital, data-and-cloud-computing, and technology) are eager to understand how tax reforms may impact their businesses.
- The gambling industry is also interested in how the tax reform could affect their investors, personal-finance, and wealth-management.
- The proposed tax reform could have far-reaching effects on lifestyle areas like food-and-drink, sports, and entertainment.
- If tax rates increase, sports, including football (premier-league, champions-league, nfl, wnba, baseball, hockey, golf, sports-betting, european-leagues, basketball, ncaa-basketball, mlb, nhl, racing, premier-league, american-football, nba, grand-prix, horse-racing, weather, serie-a, laliga, ncaa-football, tennis, and sports-analysis), may have to adjust their budgets.
- The gambling industry's response to the tax reform could impact various sectors such as the auto-racing, horse-racing, mixed-martial-arts, and technology.
- Changes in tax rates could lead to potential capital investments in the real-estate, casino-and-gambling, casino-games, lotteries, and casino-personalities sectors.
- Stakeholders in the books, entertainment, and casino-culture industries are watching the tax reform closely to assess its influence on their businesses.
- Companies in the finance, business, and personal-finance sectors are focusing on how tax reforms could reshape responsible-gambling practices.
- The tax reform could also shape how the sports betting, racing, and golf industries approach compliance with responsible-gambling measures.
- The consolidation of the UK gambling tax system not only affects the gambling and finance industries directly but could also indirectly impact various sectors, including sports, technology, real estate, and entertainment.
