A new analysis by EY (Ernst & Young) warns that an increase in taxes on betting could threaten 40,000 jobs and cause £3 billion in damage to the UK economy. The research, commissioned by the Betting and Gaming Council (BGC), indicates that the measure would devastate jobs, harm the economy, and drive billions in bets into the illegal market.
The plans, championed by think tanks SMF and IPPR, would jeopardize thousands of jobs and channel £8.4 billion into the illegal market. Furthermore, the economic contribution of the betting sector to the UK would be reduced by £3.1 billion, while tax revenue would fall far short of the amount claimed by proponents of the proposal.
How would the tax increase impact the betting industry?
Currently, BGC members contribute £6.8 billion to the economy, pay £4 billion in taxes, and support over 109,000 jobs. These jobs include thousands of highly skilled positions in the technology sector in regions such as Stoke-on-Trent, Manchester, and Leeds.
However, the new tax increases threaten to undermine this success, bringing serious consequences for workers and the Treasury.
Grainne Hurst, CEO of the BGC, stated: “It is now clear that these new tax increases represent a direct threat to British jobs and economic growth.”
She also explained: “The numbers speak for themselves: tens of thousands of jobs lost, billions diverted to the black market, and a potential loss of £3 billion to the economy.”
The proposals and their direct consequences.
Both the SMF and the IPPR recommended increasing, and in some cases doubling, taxes on gambling. Currently, betting companies pay tax on Gross Gambling Income (revenues minus customer winnings) with rates of 21% for online gambling, 15% for sports betting, and 20% for slot machine games. The new proposals suggest rates of 50% for online gambling and 25% for sports betting.
An analysis of the proposals from the SMF (Social Market Foundation) showed that the measure would cost 30,200 jobs and bring £8.1 billion into the illegal market.
On the other hand, IPPR’s plans would cost 40,000 jobs and reduce the sector’s Gross Value Added (GVA) by £3.1 billion. Although IPPR claimed the increases would generate £3.2 billion, EY’s analysis indicates the real gain would be just over £1 billion.
Real impact on revenue and the market.
EY’s modeling suggests that, when considering factors such as job losses and business closures, the Treasury’s net gain could fall to less than £500 million.
Industry experts have warned that this gain would diminish as bettors abandon the regulated sector. Furthermore, both think tanks ignored the 2023 Gambling Act Review White Paper, which already predicts a £1 billion reduction in industry revenues.
Hurst added: “Balanced regulations and a stable tax regime ensure a growing regulated sector. But these proposals would achieve the exact opposite and undermine the very consumer protections that keep people safe.”
Entain CEO Stella David also warned that further tax increases could force store closures. EY’s findings make it clear that the measure will not increase revenue, but rather dismantle a competitive UK sector.
