Share prices of listed UK gambling operators rebounded today (30 October) after the industry escaped the rumoured dramatic tax hike in the Autumn Budget 2024.
Entain, evoke plc, Rank Group and Flutter Entertainment all saw their share prices return to close to their pre-11 October levels.
Major UK gambling businesses saw over £2bn of value wiped away earlier in the month after The Guardian’s Rob Davies reported the UK Government was planning a multi-billion pound tax raid on the industry.
The change was rumoured to involve taxes doubling on “higher harm” gaming products, including a Remote Gambling Duty (RGD) of 50%, which would be one of the highest rates in Europe.
However, Chancellor of the Exchequer Rachel Reeves did not ultimately opt to pull this lever, announcing no new gambling taxes in Parliament.
Commenting on the budget, Richard Moffat, chief executive of sports betting affiliate OLBG, said: “We were initially worried about the rise in remote gaming duty rumours, as operators would likely have swallowed these costs by rolling out worse products, worse pricing and fewer offers for gambling consumers.
“When this happens, punters consider switching to the black market, where friction is lower because player protection is non-existent and taxes are not always being paid.”
UK to consider unifying online gambling tax
In the 170-page document published following Reeves’ address, the government said it would be consulting on reform of the current remote gambling duty.
The document said: “The government will consult next year on proposals to bring remote gambling (meaning gambling offered over the internet, telephone, TV and radio) into a single tax, rather than taxing it through a three-tax structure. This will aim to simplify, future-proof and close loopholes in the system.”
Besides RGD, the other two taxes that may apply to online gaming operators are General Betting Duty (GBD) and Pool Betting Duty (PBD).
GBD is currently applied at 15% of betting exchange commission fees, 15% for fixed-odds and totaliser betting, 3% for financial spread betting and 10% for other spread betting.
Meanwhile, PBD, which applies to non-fixed odds and non-horse and dog racing betting, is set at a rate of 15%.
While RBD was historically set at the 15% rate, the previous Conservative government chose to hike it to 21% in 2019 to replace lost revenue from the banned Fixed Odds Betting Terminals (FOBTs).
While the government has not revealed how exactly the current three tax system will be reformed, it is hard to imagine the government will drop RBD to its previous 15% rate.
As such, one possible outcome is the government will opt to unify all taxes at a 21% rate, which would be a hike for most forms of online sports betting.
Industry avoids ‘worst case scenario’
Jamie Walters, CEO and co-founder of QiH Group, added: “The speculation proved to be just that, as an anticipated rise in remote gaming duty never materialised. While the industry clearly avoided a worst-case scenario, that does not necessarily mean this was a good budget for business.”
Walters warned that the rise in proposed employer National Insurance contributions may prove difficult for some smaller businesses, but said this at least would be consistent with its commitment to protect the general working public from tax hikes.
Neil Roarty, head analyst at ClickOut Media, added: “This will come as a welcome surprise for the industry, and also for consumers, who would have been forced to shoulder the cost on behalf of bookmakers.
“The tobacco and vaping industry was in the ‘vice’ sector crosshairs instead on this occasion.”