Analysts Challenge the Maths Behind UK’s Proposed Gambling Tax Hike

A letter to the Chancellor, written by over 100 MPs, pushed for higher taxes on betting to end the two-child benefits cap. It suggests that doubling the General Betting Duty to 30% and elevating the Remote Gaming Duty to 50% could produce £2.9 billion in the first year and up to approximately £3.4 billion by 2030.

However, after industry experts used current data to calculate the predicted result, they found that the given measures would only generate around £2.1 billion.

In order to achieve the quoted sum, other enlargements such as increasing the Machine Games Duty to 50% and hiking casino duty bands (suggestions made by IPPR think-tank), would have to be included. This was not recognised in the MP’s proposal.

Critics believe this inconsistency is a result of selective interpretation of the data. They argue that the letter merges revenue with profitability, disregarding how many gambling businesses have slim operating margins.

According to Regulus, adult gaming centres, betting shops and casinos usually function on margins of around 10%, meaning the proposed duties could eradicate profit entirely. Analysts warn that this could cause closures, endanger as many as 80,000 jobs and decrease tax yields.

Several international comparisons were used by the MPs as supplementary justification for the raised fees. They named the recent increases in the Netherlands, but economic professionals noted that these coincided with falling tax receipts as players transferred to unregulated operators.

MPs failed to note that the 55% levy rate in Pennsylvania applies exclusively to online slots, not the wider market, and they did not disclose that Austria’s surge to 55% is propelling customers to offshore sites.

The inflated betting tax in France has been connected to one of the largest black markets in Europe, further reaffirming fears that drastic tax regimes can have adverse effects.

Inability to tackle structural issues like distortions created by additional taxation has the potential to intensify monetary strain, condense the regulated field and aggravate black market development.

The Chancellor faces a policy predicament. She must balance the demand to grow revenue while combating the risk of driving the industry past the Laffer Curve tipping point, where higher rates produce less revenue.

Regulus advised that it “might be better all round to invest more in education from early years to new MPs – especially in mathematics, business, finance, and economics.”

UK gamblers should prepare for massive changes to online and land-based casinos alike if the new duties enter the industry.