Not many people escaped from the UK government’s autumn Budget unscathed as far as tax hikes are concerned, but the gambling sector – surprisingly to many – did.
And so unexpected was the ‘tax relief’ that share prices for some of the largest operators in the industry have soared accordingly.
It may well be the case that the government’s stance changes in their next budget in 2025, but for now the gambling sector can breathe a collective sigh of relief that the already-stringent tax system by which they must abide has not been worsened by the chancellor.
Tax Relief
It had been suggested that the betting and gaming duties paid by gambling firms would be increased as part of the budget, with online casinos expected to be worst hit.
But as the chancellor, Rachel Reeves, revealed the contents of her shiny red briefcase on Wednesday, it became clear that the industry had evaded a uniform increase.
It’s true that operators will be stung in other areas – like many other businesses, they will have to stump up more in National Insurance contributions (NICs), for example, as well as having to pay staff more with the minimum wage increased, but they won’t face any additional tax hikes levied on their annual revenue.
There are, however, plans to launch a consultation in the possible simplification of remote gambling duty, which would see the different taxes levied on sports betting and casino gaming merged into a single tax; with the aim, as per the government, to ‘future-proof and close loopholes in the system.’
The average Joe and Jane have also, by and large, avoided tax hikes and a worsening of their own financial position, which should in turn see the amount of spending on leisure activities and hobbies remain the same.
But the overall positivity of the budget was met with incredible relief from gambling firms already fearing the outcome of tighter regulation, while the confidence of investors has also been restored: the calamitous fall in share price experienced by many industry players earlier in October has since been reversed.
On the morning of the budget (October 30), Entain’s share price had fallen to £709.40; a 29% decrease from the start of the year. But, by the very next day, the stock had rallied to £775, before stabilising at £743 on the morning of November 1.
There was similarly good news for Flutter, whose share price has rallied by 4.25% since the morning of October 30, while Evoke – an operator that focuses heavily on the UK market – had enjoyed a rocketing 18.35% rise in their share value.
“We welcome today’s budget and its commitment to not increase gambling duties on the regulated betting and gaming sector,” said the CEO of the Betting and Gaming Council, Grainne Hurst.
“We have been clear, any duty rises now would have hit customers, prevented growth, risked jobs and bolstered the unsafe, unregulated gambling black market.”
The larger holding companies should be able to absorb the increased costs of the budget in other areas comfortably; but small and medium enterprises in the sector may be the ones left to struggle by NIC and minimum wage hikes.
Another Hurdle for Horse Racing
So while the news was good for the gambling industry as a whole, for one of the most popular sports to wager on the prognosis was somewhat less positive.
BHA’s Director of Communications and Corporate Affairs Greg Swift has issued the following response to the publication of today’s Budget.
Click to read the full statement.
— British Horseracing Authority (@BHAHorseracing) October 30, 2024
Although the top training yards are largescale operations that make plenty of money, smaller trainers – the lifeblood of the sport – operate on much tighter conditions.
An increase in the business rates that firms in the leisure and hospitality sectors must pay, which will be in place until 2026 at the earliest, could prove financially crippling for some.
That, allied to the increase in National Insurance contributions that they must now pay – as well as the rise in minimum wage – will likely see some low-key trainers forced to exit the sport.
“It is reasonable to assume that this [the budget] will affect hundreds of racing businesses across Britain,” a statement from the British Horseracing Authority reads.
“With the economic headwinds currently being experienced by British racing, these extra costs on small businesses already operating on tight margins risk causing significant damage to Britain’s rural and racing communities.”
Other aspects of the budget are likely to impact the rural way of life; of which many trainers and breeders are a part.