4 days ago
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Online casinos and bookmakers will pay billions of pounds more in tax under a steep rise in duties levied on their takings from British gamblers.
Shares in UK gambling firms began tumbling even before Rachel Reeves announced the change in her budget, after the Office for Budget Responsibility (OBR) – which assesses the likely impact of tax changes – accidentally published a document confirming that the industry had been singled out for higher taxes.
But larger and more diversified players, such as Flutter, which owns Paddy Power, and Ladbrokes’ owner Entain, recovered much of their losses later in the day, as it became clear that firms heavily weighted towards online gambling would be hit hardest.
In her second budget as chancellor, Reeves announced duty changes that the OBR expects to raise an extra £1.1bn a year by 2029-30, raiding a fast-growing sector that made £12.6bn from punters last year.
The most eye-catching is a near doubling of remote gaming duty (RGD), levied on online casinos, rising from 21% to 40% next April. The rise is higher than many investors and industry sources had been braced for.
Meg Hillier, chair of the Treasury select committee, said Reeves had rightly refused to bow to industry “scaremongering”, something her committee had accused lobbyists of in a report earlier this month.
“Some parts of the gambling industry, such as racecourses and bingo halls, make a cultural contribution to our country,” she said.
“This is not the case, though, for online slots and other remote gaming, which can quickly drain the bank balances of vulnerable people after just a few clicks of a button on a phone.
“It’s reassuring to see that the chancellor agrees with us on this and I look forward to discussing it further with her when she appears in front of us in December.”
General betting duty, levied on sports bets, will rise from 15% to 25% for wagers placed online from April 2027, but there will be no change for bets placed in high street bookmakers.
Bets on horse racing – a sport that relies heavily on income from gambling firms – will be exempted from the increase. Bingo duty of 10% will be abolished altogether.
Reeves said she was targeting online gambling because it is “associated with the highest levels of harm”. However, she did not increase machine gaming duty, charged on income from high-street slot machines, which are also linked to high rates of addiction.
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Leading figures from the gambling industry, including company chief executives and lobbyists, claim that an increase on the scale announced by the chancellor will cost jobs and ultimately damage the economy.
Shares in Evoke, which owns the 888 and William Hill brands, tumbled by more than 10% on news of the changes. But Entain, Flutter and Mecca Bingo owner Rank saw their stock recover and even increase in value by mid-afternoon.
The OBR said it expected the changes to raise an extra £1.1bn a year for the Treasury by 2029-30. The figure would be higher, at £1.8bn, but the government expects some customers to bet less and admits that others are likely to switch to the illicit market, as the extra duty is passed on to consumers in the form of less attractive odds and bonuses.
Reeves explicitly linked the increase to the government’s decision to lift the two-child cap on child benefit, listing the duty rise among the measures that funded the latter decision.
The former prime minister and chancellor Gordon Brown previously called for a larger increase in duties, raising around £3bn, to pay for lifting children out of poverty.
