A recent strike from the UK’s horse racing industry was part of a protest about a potential hike in tax that could have a detrimental effect on it. This could be the biggest change to gambling tax rates in the UK since 2001.
The gambling industry in the UK has changed significantly in recent years, with many high street bookmakers scaling down their retail operations, instead focusing their energy on more cost-effective online services. This has resulted in a competitive industry, with gambling expert Elliot Law revealing that there are more than 175 online bookmakers in the UK at present.
This gives consumers a massive choice, and these rankings can help them find the most suitable options for their betting needs. But a government move to increase gambling tax rates for retail bookmakers to bring them in line with online casinos could have a massive impact.
Horse Racing Tax Proposals
Betting tax in the UK was overhauled in 2001, when bookmakers began paying 15% tax rather than bettors footing the bill. Previously, consumers had to choose whether they wanted to pay 9% tax when placing a bet or have 9% of their winnings taken from them.
This made betting less complicated and has worked well for almost 25 years, but proposals to raise tax rates to 21% to bring it in line with online casinos have concerned operators.
At present, there is nothing concrete in place, with the Treasury's Exchequer Secretary, Dan Tomlinson MP, explaining that any discussion regarding an increase in tax rates for UK bookmakers is purely speculation. Rachel Reeves, the current Chancellor of the Exchequer, will deliver the next Budget on November 26th, and many bookmakers will be keen to hear of any developments.
Racecourse betting currently enjoys tax exemption, and the Treasury has stated that this is not at risk. However, increasing uncertainty is likely to impact share prices and market confidence, so the sooner an announcement is made, the better. Improved transparency from the government would be helpful, and including experts from the gambling industry in discussions could also be beneficial.
Potential Impact of a Tax Hike on the Industry
The BHA (British Horse Racing Authority) projected a cost of approximately £330 million over 5 years if the rise in tax goes ahead, going on to claim that this could put as many as 2,750 jobs at risk.
As well as a direct hit on revenue, there are fears that the UK's second most-watched spectator sport, after football, could see a decline in marketing and sponsorship. Bettors would also feel the pinch, with betting odds becoming less desirable as operators attempt to recoup losses.
This could lead to an increase in offshore betting, where operators don't face the same tax rates and have the potential to offer more competitive odds. The long-term effect of betting markets moving to offshore operators could also see a decline in revenue that would damage the foundations of the industry in the UK.
Jobs at risk from industry decline go beyond bookmakers, with trainers, venue staff, and other businesses that rely on busy race days all facing a challenging future, depending on any government decisions.
The Labour government will undoubtedly receive criticism from industries affected by any tax changes, but it must find a way to balance the books. The concern for bookmakers and other industry insiders is that while a tax increase would result in the government receiving a higher level of revenue from gambling in the short term, if it damages the industry, it will create bigger problems.
Finding a solution that can ensure the gambling industry is paying its fair share towards the national economy, without jeopardising its future, will be a priority for the government.
