The UK government has launched a consultation into a proposed single tax rate for gambling operators, which would replace the previous three-tier system.
But if approved, it could see bookmakers landed with an extra 6% hit on their profits each year.
Industry stakeholders now have until July 21 to air their concerns, with the possibility of a major tax hike for online operators forthcoming in October 2027.
Consolidation and Reform
The open consultation, named ‘Tax Treatment of Online Gambling’, is available for comments and responses via a dedicated page on the government’s website.
“The government is proposing to reform the tax treatment of remote (e.g. online betting or online casinos) gambling by consolidating the three different duties that currently apply to remote operators into a single Remote Betting & Gaming Duty (RBGD),” the introduction reads.
“This will mostly affect online betting (e.g. sports bets) and gaming (e.g. slots & casino) businesses; simplifying tax administration and promoting compliance.”
At the time of writing, the UK gambling industry has that three-tiered system of taxation that sees some remote operators pay 21% of their profits in gaming duty, while others face a 15% tax (‘general betting duty’). There’s also a 15% levy on pool betting duty for those firms operating in that particular niche.
Under the government’s new plan, there would be a homogenised 21% tax rate for all online gambling firms. And so while the situation wouldn’t change for some, others will be hit with a 6% hike – in real terms, that will cost them significantly.
More and more punters are placing bets with remote operators on their mobile devices, so the government’s planned tax hike will see millions more paid into their coffers.
And the question is how will bookmakers respond to another hit on their finances: will jobs be affected? Will they be forced to increase their margins and therefore offer even stingier odds to their customers?
The government has already sent shockwaves through the industry after rumours suggested they were planning to increase taxation to 50% for remote operators in 2024 – thankfully, that turned out to be a red herring, but not before millions had been wiped off shareholder value as spooked investors sold up.
That never came to pass, although in filings made in conjunction with the Autumn Budget, the chancellor – Rachel Reeves – did confirm that talks to consolidate the gambling sector under one tier of taxation would take place ‘next year’.
If enough industry stakeholders respond negatively to this new consultation, it may force ministers to review their tax reforms. But, so far at least, they have tended to act on the key findings of the Gambling Act White Paper, and so a harsher stance on taxation would seem likely.
Horse Racing on the Rails
As has typically been the case whenever the betting industry faces a downturn, horse racing – as a sport – suffers.
It is inextricably linked to the sector which acts as its key financier, with payments made via the betting levy something of a lifeblood to racing.
In 2024, gambling firms paid a combined £105 million into UK horse racing via the Horserace Betting Levy Board, with contributions to prize money – often cited as one of the sport’s greatest struggles – exceeding £70 million.
Bookmakers and betting firms are also very active sponsors of individual races or entire meetings, but if they’ve got less money in their ledger then it’s possible they will spend less on marketing their brands in this way.
The lack of financial heft within the sport is forcing some training yards to shut up shop, while more and more young horses sold at auction are being sent overseas to race – where the riches on offer dwarf those available in the UK when costs are also taken into account.
The matter is hardly helped by the introduction of affordability checks on punters, which has seen some stop betting altogether and others access the black market overseas… using operators that contribute zero to the UK economy in tax payments.
James Murray, the exchequer secretary to the treasury, commented:
“The tax system needs to keep pace with the developments and innovation that have seen the UK-facing remote gambling sector change significantly in recent years.
“Since remote gambling was first developed it has grown exponentially; the three-tax system needs to adapt to reflect the dynamic and expanding nature of the sector.”
But at what cost?