UK Labour Government Considering Doubling Taxes on ‘Higher Harm’ Gambling Products

The UK’s Labour Government is exploring the possibility of doubling tax rates on gambling products deemed "higher harm," including online casino games. This proposal could raise between £2.9 billion in 2025 and as much as £3.4 billion by 2030, according to a report by the Institute for Public Policy Research (IPPR).

The plan is part of Labour’s efforts to address a £22 billion deficit that Chancellor of the Exchequer Rachel Reeves claims to have uncovered after taking office. In 2023, taxes on gambling products and services across seven categories contributed £3.3 billion, although this figure drops to approximately £2.2 billion when excluding lottery duties.

The IPPR’s proposal suggests leaving taxes on lower-harm products like lottery and bingo untouched, while doubling the tax rates on higher-harm activities such as sports betting and casino gaming. Specifically, the proposal calls for increases in gaming duty from 15-50% to 20-60%, retail bookmaking taxes from 15% to 30%, remote gambling taxes from 21% to 50%, and gaming machines duty from 5-20% to 10-40%.

In its report, the IPPR explained its approach: "The duties we have left untouched (pools and bingo duties) are justified on being lower harm and higher value (eg employment numbers) parts of the gambling sector. By contrast, we have proposed higher duties on general betting and remote gaming, as higher harm products. We suggest this is the best application of the polluter principle, and will create incentives for companies to focus on lower harm products."

Another think tank, the Social Market Foundation (SMF), is developing a more moderate proposal, suggesting an increase in the tax on online gambling companies from 21% to 42%, which would generate an estimated £900 million.

A report in The Guardian indicates that there has been minimal pushback on the proposed tax increases, and the government is expected to include the new rates in its upcoming budget on October 30th.

A spokesperson for the Betting and Gaming Council expressed concerns about the impact of the proposed changes, stating, "Comparable markets abroad which have imposed draconian regulations and disproportionate tax regimes have seen a spike in illegal black market gambling."

In August 2024, the UK Gambling Commission reported that the online gross gambling yield (GGY) for Q1 2024-2025 was £1.46 billion, up 12% from the same period the previous year. Sports betting saw a 16% increase to £625 million, while the land-based slots sector grew by 10% to £642 million. Licensed betting operators (retail bookmakers) saw a slight 1% decrease in GGR, reporting £582 million during the same period.

By fLEXI tEAM