Fears Mount That UK Gambling Tax Hike Could Backfire

Concerns are growing among industry experts that the UK government’s planned increase in gambling taxes may end up hurting, rather than helping, the Treasury’s revenues. Chancellor Rachel Reeves is set to present her autumn budget in November, where she is expected to introduce a unified tax rate for online gambling.

Currently, the system divides online gambling duties into two categories. A general betting duty covering racing and pool betting is charged at 15%, while the remote gaming duty, which applies to online casino games and slots, stands at 21%. Reeves is facing mounting political pressure to reform the system, with former Prime Minister Gordon Brown calling on the Labour government to act, warning that failure to do so risks creating a “social crisis.” The Institute for Public Policy Research (IPPR) has argued that increasing gambling taxes could bring in as much as £3.2 billion annually.

Yet analysts at Regulus Partners have cast doubt on that projection. They have challenged the figures underpinning Labour MPs’ backing for the proposal, suggesting that the real amount is far lower, closer to £2.1 billion. More than 100 MPs have already written to Reeves urging higher duties on the industry, with the aim of funding the abolition of the two-child benefit cap, a policy that restricts child tax credit and universal credit to the first two children in most families.

However, critics point out that the letter conflates revenue with profitability and fails to account for the slim operating margins across much of the gambling sector. According to Regulus, casinos and betting shops typically operate on margins of just 10%, meaning that any steep increase in taxes could wipe out profits entirely. Analysts warn that such a scenario could trigger widespread closures across the industry, putting as many as 80,000 jobs at risk while simultaneously reducing the tax take for the government.

The British Horseracing Authority has also voiced alarm, estimating that the proposed changes could cost the sport alone up to £160 million. Meanwhile, opponents caution that without deeper structural reforms, major tax rises could end up fuelling illegal betting activity. Analysts believe this would shrink the regulated sector significantly, with the danger that higher duties “pour petrol on the rapidly-growing black market fire.”

By fLEXI tEAM