Reeves Says No to Online Gambling Tax Hike, Sparks Criticism

Last month, we reported on the Labour Party’s plan to consider a £3 billion tax hike for gambling companies, mostly aimed at online casinos and sports betting activities. 

Chancellor Rachel Reeves and ministers were then pondering a rise in the online gambling taxes from 21% to 50% that would have boosted public finances by roughly £3 billion ($3.92 billion), helping address the £22 billion ($28.7 billion) deficit identified upon taking office.

The second proposal that lawmakers took into account referred to the increase of the current 21% rate applied to iGaming in the UK to 42%. As a result, online gambling taxes would have triggered an additional £900 million ($1.1 billion).

Reeves, however, decided to say no to the latter last week, kicking the £900 million to the curve. 

As expected, Labour now faces renewed scrutiny over its ties to the gambling sector which generates £11 billion ($14 billion) a year.

The UK’s Online Gaming Tax Rate, Lower Than Most Countries 

The policy, initially put forth by the Social Market Foundation (SMF), was considered by Treasury officials and had the backing of the Liberal Democrats who intended to use the estimated £900 million to fund health and social care.

However, Labour chose not to include the gambling sector in a package of £40 billion ($51.9 billion) in tax increases, which encompassed changes to family farm taxes and employer national insurance contributions. 

The UK’s 21% online gaming tax rate will continue to be lower than those in several European countries and jurisdictions in the US, Australia, and Canada.

The Omission “Raises Serious Questions”

The Liberal Democrats Treasury spokesperson, Daisy Cooper, stated that the omission to double the remote gaming duty (RGD) on online games of chance “raises serious questions for the Labour government about why they failed to act on this issue.” 

Cooper expressed particular concern over the chancellor’s decision to target family farms, GPs, hospices, and small businesses while allowing major gambling companies to escape increased taxes. 

Liberal Democrats leader Ed Davey also criticized the decision, calling a duty rise an obvious choice for a government “who wants to tackle our social problems.”

Similarly, Derek Webb, Labour’s fifth donor and also a former casino game inventor, echoed these sentiments, expressing disappointment on “another missed opportunity to constrain the greed of the online gambling sector.” He also called it a “missed chance” to win the popularity of the wider public, which had previously expressed its strong support for higher taxes on gambling, “rather than with narrow detrimental business interests.”

Dangerous Ties 

The government has indicated that it will review gambling taxes, including the RGD, aiming to simplify the tax system. 

However, voices lobbying for a higher RGD have pinpointed Labour’s connections to the gambling industry, including the Coates family behind Bet365 which has contributed hundreds of thousands of pounds to Labour along with Keir Starmer’s leadership campaign. 

Rachel Reeves’ constituency office also accepted £30,000 ($39,000) in total from Sky Betting & Gaming’s former chief executive, Richard Flint, and Gamesys’ director, Neil Goulden. 

Furthermore, Reeves has maintained a long-standing friendship with Michael Dugher, the former Labour MP who now chairs the gambling industry lobby group, the Betting & Gaming Council (BGC). 

The BGC Emphasizes Negative Impact on Customers

Grainne Hurst, who is BGC’s chief executive, stated that any tax hikes would have a negative impact on customers, inhibiting growth, risking jobs, and bolstering the unregulated gambling black market. 

Hurst further added the government has carefully listened to the BGC and its members, “got the balance right” and rejected anti-gambling prohibitionists’ calls. 

A Treasury spokesperson added that, in 2025, the government will consult on reforming the tax treatment of online gambling to close loopholes and simplify the current system.

Last week, Reeves said the government would consult on proposals “to bring remote gambling into a single tax rather than taxing it through a three-tax structure,” referring to the current 21% remote gambling duty tax, the 15% general betting duty tax on net stake receipts, and the 15% pool-betting duty tax on pool betting receipts.