On Wednesday, October 30th, the Government will deliver its Autumn Budget with tax, benefits, and spending changes set to affect the public and businesses. One of the key talking points will centre around any changes to energy bills as the weather begins to get colder.
All industries will hold their breaths to see how they will be affected, and fears of a tax hike in the gambling sector have seen share prices drop. Ladbrokes owner Entain saw shares drop by 14% before levelling out to reveal an 8% drop at the close of trading.
Entain was not the only operator to suffer with William Hill and 888 owner Evoke dropping in value by 14.3%, Paddy Power and Betfair owner Flutter dropping by 6%, and casino group Rank seeing share prices fall by 3.2%. This tough day of trading saw a loss of over £2.4 billion in the company’s market capitalisation.
Retail and online betting operators in the UK are already facing uncertain futures because of the popularity of offshore alternatives. Gambling expert Vlad Grindu describes how easy it is for consumers to find international casino platforms in the UK which offer an extensive range of betting markets and enticing offers, secure platforms, and a variety of payment methods.
The IPPR (Institute for Public Policy Research) had suggested significant increases in duty for retail and online bookmakers. The current duty paid by high street bookmakers is 15% while online operators pay 21% gaming duty. The independent researcher suggested doubling retail duty to 30% and increasing online casino duty to 50%.
However, this was immediately shot down by experts who explained that large UK gambling operators worked on profit margins of around 15% to 20% in the retail sector and 20% to 25% online.
Doubling duty would wipe out potential profit margins for major companies that would be forced to look at alternative markets.
Chancellor of the Exchequer Rachel Reeves was quick to play down reports and advised that the government was pleased to have large companies choosing the UK as a location to create jobs and invest. She acknowledged that the tax system in the UK must be fair and benefit the country, but made it clear that driving businesses away with large tax hikes would not be beneficial in the long term.
The UK’s current tax rates for gambling operators are much lower than some other locations, with tax rates of between 40% and 55% elsewhere in Europe. This helps to attract businesses and compromising this could see tax revenue decrease through businesses closing.
The gambling industry is already strictly regulated and must comply with responsible gambling initiatives to be allowed to operate in the UK. Online operators must sign up to Gamstop, a free self-exclusion service, and ensure new customers have not signed up to the scheme.
High-street bookmakers also offer self-exclusion and age-check programs to ensure vulnerable people are kept safe.
The government walk a fine line by ensuring gambling operators behave responsibly and pay a fair amount of tax on revenue, but they must also be careful not to damage a lucrative industry.
