Are Higher Taxes On the Way for the UK Gambling Industry?
Two major fears that a gambling company has are increased levels of regulation and higher tax payments. The UK gambling industry has seen tighter regulation introduced this year but is a rise in the taxation rate also on its way?
It is recognised even by the industry itself that gambling reform is needed in the UK. There have long been concerns over the levels of gambling harm that is being suffered by players, though rates remain fairly steady.
Why Reform is Needed
The reason why reform is needed is because the last Gambling Act came into force 20 years ago. The gambling industry, both in the UK and around the globe, has seen great change in the two decades that have followed. The massive growth in online gambling has drastically altered the way in which we gamble.
24/7 gambling is now the name of the game and not just on our home computers but mobile devices too. The 2005 Gambling Act has therefore become outdated and needs to be transformed so it is fit for the digital age.
The change of government that took place last year saw Labour take over in Downing Street. No immediate action was taken as they wanted to consult with interested parties to discuss what shape the reforms would take.
This year has seen concrete action taking place. A long-term worry has been the addictiveness of online slot games. Particular concerns over young players has seen the maximum stake players aged 18-24 can stake on one spin of the reels set at £2. For older players, it has been cut to £5 a spin, though there remains calls for it to be £2 for all players, regardless of their age.
According to British Gambler, the UK gambling companies have previously made voluntary donations to help fund treatment of gambling harm and research into the subject. However, the government feels that some companies are making considerably lower payments than others.
As a result, a new mandatory levy has been introduced which will be dependent on the gross gambling yield a company makes and aims to raise £100 million a year. This will hit the financial results UK gambling companies release but there are other possible threats on the way.
Consultation is currently taking place on how the UK gambling industry should be taxed. The current three-tier system is likely to be replaced by one single gambling tax. This aims to make the system less complicated but the industry fears that it will see the amount of tax payable increase.
The Autumn Budget is Crucial
The Autumn Budget is going to be a crucial one therefore. Last year there was talk of an increase in gambling taxes but that didn’t happen. There was the increase in National Insurance which has affected the gambling industry as it has other businesses.
With another black hole in finances, Chancellor of the Exchequer Rachel Reeves is actively looking for ways in which to raise additional funds. Eager not to increase income tax, a rise in gambling taxes is a way of reducing that black hole. Former Labour Chancellor and Prime Minister Gordon Brown has called for the gambling tax rate to be increased to help reduce child poverty in the UK.
The prospect of higher taxes is causing great concern. The Betting and Gaming Council are dead set against any rise. Their CEO, Grainne Hurst believes an increase would “make a mockery of the Government’s growth strategy.and be catastrophic for horseracing.”
The CEO added that such an increase would also increase the risk of seeing a rise in the number of gamblers who head to the unlicensed and unregulated black market. This is already costing the industry money as tighter regulation such as affordability checks are disillusioning those who play at licensed sites.
The black market does not pay any taxes or make a contribution to the new mandatory levy. Further expansion of the black market will not be good news for the industry but also the government with less revenue being available to tax. It’s not good news for the actual gamblers either with considerably lower levels of customer protection on the black market.
Just what will happen in the coming months? Further regulation will address the problem of the bonuses that UK gambling companies offer. Some have terms and conditions attached to them that make withdrawing funds from your account a difficult task. A reduction in wagering requirement to a maximum 10x is on its way but again this could lead to gamblers leaving the licensed market.
The government faces a situation where stricter regulation is needed but it must be fair. The vast majority of players gamble in a responsible manner and many resent being targeted for no reason. A balance must be found to deal with gambling harm but not lead to more players going to the black market.