Former Prime Minister Gordon Brown has urged current officials to consider increasing taxes on the gambling sector. This move aims to generate revenue that can be redirected to combat child poverty. The Institute for Public Policy Research (IPPR) estimated that taxing the industry at rates as high as 50% could raise an impressive £3.2 billion.
Betfred’s Warning on Gambling Tax Increases
The Betting and Gaming Council has criticized Brown’s proposal, deeming it “economically reckless.” They argue that such an increase would push gamblers into the unregulated black market. Betting companies, including Betfred, have voiced strong opposition to the idea of rising taxes.
Potential Job Losses and Retail Closures
- Betfred’s owner, Mr. Done, warned that increased taxes could lead to closures of High Street shops.
- He indicated that even a tax increase to 40% would make the business unprofitable.
- According to Done, this scenario could result in approximately 7,500 job losses.
Currently, around 300 of Betfred’s shops are losing money. This situation could worsen with a 5% increase in gambling taxes, potentially pushing the number of unprofitable locations to 430. Done emphasized that if the UK gambling industry suffers significant taxation, many customers would turn to offshore bookmakers who do not contribute tax revenue to the UK.
Current Tax Structure and Market Challenges
In the UK, while winnings from gambling are not taxed, the industry is subject to various other taxes:
- 21% tax on online casino gaming
- 20% stake duty on slots and gaming machines
- 15% general betting duty on sports fixtures
- 15% general betting duty on horseracing
Mr. Done also highlighted that recent increases in National Insurance Contributions (NICs) and minimum wage regulations have added approximately £20 million to operational costs. He acknowledged the trend of customers shifting to online betting, which may contribute to the gradual decline of High Street locations.
Rival Firm’s Closures and Future Outlook
Another gambling company, Paddy Power, announced it would be closing 57 shops across the UK and the Republic of Ireland. This decision is attributed to rising cost pressures and challenging market conditions. Mr. Done projected that, without tax increases, High Street betting shops may survive for another two decades.
In its recent financial disclosures, Betfred reported nearly £1 billion in revenue. However, after asset writedowns, the operating profit stood at merely £500,000. The family-owned company has interests in the UK, Gibraltar, the US, and South Africa and is engaged in both online gambling and physical sports betting.
