UK plans single remote gambling tax amid industry pushback

Fears are emerging amongst those in the UK gambling industry, especially in the betting and horse racing sectors, as the government is proposing a new remote betting and gaming duty (RBGD). This single tax reform would be set to replace the three-tier system, which is currently in place.

What’s proposed?

The existing tax system is split into three categories: Remote Gaming Duty (21%), General Betting Duty (15%), and Pool Betting Duty (15%). The proposal aims to combine all three of these into one single tax code. The reform would also look to modernise and simplify the current system, which has been in place since 2014 with minor adjustments throughout the years.

A consultation has been set up to discuss the plans, with a deadline set for the 21st of July. This gives the taskforce 12 weeks to analyse input from industry stakeholders.

The government’s justification

The government’s rationale for the changes is that a new single system would keep the tax in line with the modern digital gambling landscape. It is also thought that streamlining would reduce administrative burden, bring clarity to the gambling tax, and heavily support gambling regulation procedures, along with tying up any existing loopholes.

Exchequer Secretary to the Treasury, James Murray, had this to say on the proposal:

“The tax system needs to keep pace with the developments and innovation that have seen the UK-facing remote gambling sector change significantly in recent years. Since remote gambling was first developed, it has grown exponentially; the three-tax system needs to adapt to reflect the dynamic and expanding nature of the sector.”

Industry reaction

However, the news has not been well received by some quarters of the gambling industry. There is a belief that the move would negatively impact online platforms by increasing costs for licensed operators. This could lead to a closure of UK operations for some and a move overseas.

It is thought that this would also place a financial burden on the UK’s horse racing industry, along with putting player gambling safety at risk.

Speaking on the matter, BGC chief executive Grainne Hunt had this to say;

“If General Betting Duty is raised to the same level as Remote Gaming Duty under one new tax, it would be catastrophic for racing’s fragile finances. It will also likely force businesses to push investment and jobs overseas, while making their products more expensive for UK customers, driving them to the growing unsafe gambling black market online, which doesn’t pay a penny in tax and doesn’t have any of the safer gambling protections available in the regulated sector.”

It has also not been forgotten that the industry is still properly coming to terms with changes which were brought about by the gambling white papers in April 2023. It is believed these regulation changes have already cost the industry over a billion pounds in revenue.

Broader implications

There have been other sections also vocal about the proposal, which both echo Hunt’s statements and bring up other implications.

Gambling consultant, Steve Donoughue, agreed on the importance that the black market will play should the new tax system change come about. He believes more gamblers will be forced to unlicensed platforms in search of competitive deals.

He also has fears that the reform is a ploy by the treasury to increase much-needed tax revenue. 

“Anyone who believes this will be seen as an opportunity by the cash-strapped treasury to revert all taxes back to the original idea of having practically all gambling taxes at 15%, is living in cloud cuckoo land,” Donoughue said.

“A decade ago, the treasury said they believed you could tax online gambling as high as 29% without creating a black market, so the new rate could be up as high as that.”

The government’s suggestion that remote gambling has grown by over 200% since 2014 has also been disputed. Regulus Partners has questioned the claim, arguing it’s based on flawed comparisons that ignore a major tax regime change that year. They suggest the actual growth since 2015 is closer to 36%, calling the government’s figures misleading.

Measured stance

Reactions to the news have not been all doom and gloom, however. For instance, Entain has taken a cautious and pragmatic stance on the proposed tax reform, suggesting that any changes are still a long way off. CEO Stella David, who was recently appointed as Isaac Swift's successor as CEO,  noted that due to the lengthy legislative process involved, the new tax system likely wouldn’t come into effect until at least late 2027 or early 2028, and the company is choosing to monitor developments rather than oppose the plan outright.

What’s next? 

As we stated earlier, the consultation will remain open until near the end of July. This will give stakeholders ample opportunity to respond to the proposal. But it is no secret that the restructuring of the tax system could be a sticky cost that will affect operators, gamblers, and the racing industry as a whole.

It is thought that the decision on whether to go ahead with the reform will be made by October 2027.