The Betting and Gaming Council has hit out at a proposal for a new, targeted levy on online gambling operators in the UK, describing the plans as “short-sighted” and saying the “quick fix” policy could cause harm to the industry.
Last week, more than 100 Labour MPs wrote to Chancellor Rachel Reeves calling for a new levy for online gambling operators to help raise funds for a potential increase in child benefit.
At present, families are faced with a two-child benefit cap, meaning they can only claim for their first two children. However, the government is facing increasing pressure to scrap this and do more to help lift families out of poverty.
The Labour government is yet to confirm whether it would consider making changes to the current system. However, over 100 of its own MPs put their name to a letter that backs the expansion and a proposal as to how the government would generate the funds required to meet demand. This, the MPs said, would be a “targeted” levy on online gambling operators active in the UK.
However, the proposal has been met with criticism by the BGC. The council said it “strongly opposes” higher tax rates, saying such a move would be “short-sighted” and harm jobs, investment and sports funding, while failing to deliver more revenue.
“BGC members already contribute £6.8 billion to the economy, pay £4 billion in taxes and support 109,000 jobs,” the BGC said. “Piling further tax rises onto the sector, on top of reforms that have already cost over £1 billion, risks undermining a responsible industry.
“Every time the Treasury squeezes the regulated sector, it strengthens the unsafe black market, which pays no tax, offers no consumer protection and puts UK jobs and growth at risk.”
BGC CEO sympathises with chancellor
CEO Grainne Hurst also issued a response, in which she sympathised with the task the chancellor has in raising additional funds for wider policies and growing the economy. However, she cautioned against what she described as a “quick fix” policy in increasing gambling tax.
“They have sold this policy as a quick fix, an easy solution, but the truth couldn’t be further from the truth,” Hurst said. “Each month, 22.5 million people enjoy a bet, in bookmakers on hard-pressed high streets, in casinos, which are a pillar of our leisure and tourism sector, plus in bingo halls and online.
“It’s these millions of people who will feel the hit if this government caves to the demands from those who look down their noses at people who enjoy a bet, and who have gleefully heaped more pressure on the chancellor.”
Black market warning on tax rises
Hurst also repeated earlier warnings about the impact of higher tax on illegal activity. She said further tax rises risk “degrading” the offer of regulated gambling to a point that customers could turn to the black market.
“They will be the winners if the anti-gambling lobby gets their way, not less betting, just more gambling with illegal operators,” Hurst said. “Each year 1.5 million Brits stake up to £4.3bn on the growing unsafe gambling black market.
“This black market doesn’t care about player protections, doesn’t back sports and doesn’t pay a penny in tax. And it’s growing daily. The last thing it needs is another leg up in the form of a new tax hike.”
Concluding her response, Hurst urged a “balanced” approach to gambling policies. She added the BGC would be keen to work with the government to form new regulations that benefit all parties.
“Further tax rises now will make matters worse, suppressing growth and risking jobs,” Hurst said. “We want the chancellor to succeed. We want to be a partner in the growth she is so ambitious to deliver. Indeed, we are one of the few sectors ready to deliver it both locally and nationally.
“But we need balanced regulations and a stable tax regime to do that, not more uncertainty. The chancellor faces many pressures; she needs solution, but hitting punters with more taxes won’t solve anything.”
‘Compelling’ case for additional tax, say MPs
In the letter, the MPs said the targeted levy would differ to the proposal that was tabled by the government in April. This would have seen it scrap the three-banded tax rate system and replace it with a single rate for all remote gambling.
“The Gambling Reform All-Party Parliamentary Group and others have submitted responses cautioning against the proposed harmonisation,” the letter said. “Treating all remote gambling activities under one duty fails to reflect well-established differences in risk and harm.
“A single, undifferentiated tax regime risks removing important fiscal levers that currently incentivise lower risk product design and behaviour. It would also weaken the broader public health goal of reducing gambling-related harm; an objective to which this government has rightly committed.”
The MPs acknowledged the work done on the new statutory levy on gambling. This came into effect in April, having been included in the previous government’s Gambling Act white paper in 2023.
MPs said this was an important reform that begins to align funding for research, prevention and treatment. However, they also said the statutory levy does not increase the revenue generated beyond the voluntary contributions that have been in place for some time.
“This is despite the latest Gambling Commission data showing that levels of harm, including among online gamblers, are significantly higher than previously understood,” MPs said.
“In light of the levy’s limited fiscal reach and unchanged contribution levels, there is a compelling case for an additional online gambling levy. This would be a proportionate and appropriate response to evolving public health and fiscal challenges.”
Online gambling tax rate could reach 50%
MPs stopped short of saying what the new levy should be. However, the letter did reference the Social Market Foundation (SMF) and its own work on a possible new levy.
In July, the SMF proposed raising Remote Gaming Duty from 21% to 50%. This, it said, would bring the UK more in line with other jurisdictions across Europe and the US, where online gambling tax rates reach 50% or more.
The MPs referenced some of these rates in the letter to demonstrate their belief that online gambling in the UK is “lightly taxed” at 21% of gross gaming yield (GGY).
In the Netherlands, online casino is taxed at 29% of GGY, with this set to rise to 37.8% from next January. Austria has a rate of 50%, while Pennsylvania in the US taxes online slots at 54%.
“Given these international comparisons and the scale of domestic profitability, it is clear that online gambling in the UK is taxed lightly relative to both its growth and its social cost,” MPs said.
MPs keen to protect horse racing
While there was clear support for a higher tax rate for online gambling, the same group of MPs were also keen to set out their backing for horse racing. They said they would not be behind higher rates for this sector.
“Increasing taxes on horse racing risks driving consumers toward more harmful gambling products,” MPs said. “To safeguard this unique industry, horse racing should be protected through a differentiated tax approach that reflects its social and economic importance.”
The MPs concluded: “An online gambling levy – calibrated to reflect both profit and harm – offers exactly that: a credible, fair and immediate source of revenue. It would signal a government serious about aligning fiscal responsibility with social justice and committed to tackling poverty not just with words, but with action.”
MPs say the targeted online gambling levy would generate the funds needed to expand child benefit in the UK.