The government should not “cave” to the gambling industry’s “scaremongering” over a potential tax rise on online betting games, a committee of MPs has said.
The Treasury Committee said the government should tax online betting games “at a rate that reflects the level of harm they inflict”.
Earlier this year, Chancellor Rachel Reeves suggested taxes on betting firms could be raised in the Budget.
Online gambling and gaming now accounts for nearly half of the industry’s takings. Bookmakers have argued that increasing taxes could lead to the closure of hundreds of betting shops and the loss of thousands of jobs.
The report from the Treasury Committee said that while some gambling was fun and safe, it “rejects the industry’s assertion that gambling causes no social ills”.
MPs heard that online betting can promote harmful, addictive gambling behaviours “that bring no benefits to people, families and communities”.
Chair of the committee Dame Meg Hillier, said online betting games were “extracting huge amounts of money from people who have been funnelled into the most addictive, harmful corners of the industry via their love of sports, or the occasional game of bingo”.
However, Grainne Hurst, chief executive of the Betting and Gaming Council (BCG), cited NHS research showing that only 0.4% of adults are problem gamblers.
“BGC members contribute £6.8bn to the economy, generate £4bn in tax, and support 109,000 jobs, while facing an effective tax rate of up to 80%,” she said.
Punters’ winnings from gambling are not taxed in the UK, nor is VAT charged on bets. However, the gambling industry pays extra taxes, including:
- a tax of 21% on online casino gaming stakes
- duty of 20% on slots and gaming machines
- general betting duty on sports fixtures of 15%
- general betting duty on horseracing of 15%
In September, Reeves told ITV: “I do think there is a case for gambling firms paying more… they should pay their fair share of taxes and we will make sure that happens.”
Nearly a quarter of Labour MPs have signed a petition urging the chancellor to hike taxes on gambling companies and use the money to lift benefit restrictions on families with more than two children.
Flutter UK and Ireland, whose brands include Paddy Power, Sky Betting & Gaming, Sportsbet and Tombola, said tax hikes on machine and online games “could have a significant impact on the industry, jobs and investment”.
Last month, the co-founder and chair of Betfred said all 1,287 of its UK shops could disappear from the high street if the chancellor hikes taxes on gambling firms.
Fred Done said a new tax on online bets would mean there would be “no profit in the business”.
He said 300 of his shops were “currently losing money” and claimed a 5% increase on gambling taxes would raise that number to 430.
In its most recent annual results, Betfred took in nearly £1bn of revenue, but made an operating profit of just £500,000 after a series of writedowns on its assets.
An Treasury spokesperson said: “Tax policy decisions are made by the Chancellor at fiscal events. Our consultation on remote gambling focuses on the growth in remote betting websites since 2015 which employs fewer people, has lower costs, and is more profitable.”
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