The head of the Department for Culture, Media and Sport (DCMS) has been retained by the new prime minister, Andy Burnham, after he announced his cabinet reshuffle yesterday. As such, Lisa Nandy will retain her betting industry brief, working alongside the current gambling minister, Baroness Twycross.
The news was less rosy for Rachel Reeves. The instigator of November’s mammoth Gambling Tax hike has been sacked by Burnham as he seeks to distance himself from Keir Starmer’s government.
Raising a Toast
Sports betting and other forms of gambling fall under the remit of the DCMS. So the departmental head has a considerable contribution to the state of the industry, as well as in marshalling the work of organisations like the Gambling Commission.
Nandy hasn’t always been a popular figure within the sector, although she did go into bat for horse racing when it appeared as if the government was planning to raid the sport in its Autumn Budget, supporting the ‘Axe the Racing Tax’ campaign.
However, the then chancellor Rachel Reeves relented and kept duty on racing bets to 15%… which many in racing celebrated as a victory. Of course, it would ultimately be nothing of the sort, as Reeves sought other ways to purge the industry for tax revenue – hiking Remote Gaming Duty (RGD) from 21% to 40%, while the general betting duty was increased from 15% to 25%.
In the end, bookmakers and betting operators are now paying far more tax than ever before. You’ll forgive industry insiders for raising a glass or two after it emerged that Reeves would be leaving her post as chancellor as part of the new prime minister’s reshuffle.
John Healey to Replace Rachel Reeves
She will be replaced by John Healey, a veteran MP who is perhaps best known for his work as the defence secretary. It’s unlikely that Healey will have the scope or the interest to reverse the Gambling Tax hikes – remember, some of the duty increases are yet to be introduced, so could be headed off the pass.
However, it’s interesting to note that Healey has generally voted against greater regulation of the gambling industry in the past, so there will be hope – no matter how forlorn – that the tax landscape could yet be changed for the sector. Somebody who is typically anti-gambling is Burnham himself, who has already spoken of the need to hand local councils more powers to turn down the planning applications of adult gaming centres in UK towns and cities.
PM’s Stance on Gambling
Former Downing Street advisor, Alan Sendorek, commented that the new PM’s stance on gambling had ‘hardened’ over time. He said,
As culture secretary, he implemented the Gambling Act passed in 2005, including authorising casino licensing areas. Last year, he joined a coalition of 38 councils in calling for stronger local powers to limit the spread of betting shops.
The new prime minister has also revealed his belief that gambling sponsors should be banned from sport, while another bombshell could be the nationalisation of the National Lottery – throwing the current supply deal with Allwyn into possible turmoil.
Triple Threat
Nandy can now return to working through a packed in-tray, which is headed by growing concerns about gambling’s black market. A new report published by H2 Gambling Capital reveals that offshore gross gambling yield, which is an indicator of black market activity, has more than tripled since 2019 –from around £200 million to a whopping £685 million.
The firm’s data also reveals an expectation that this figure could reach a staggering £1.4 billion by the year 2031, with the Remote Gaming Duty increase – which was enacted back in April – likely to be an accelerant of the customer shift to the offshore, black market sector.
Although the report has been published in conjunction with the Betting and Gaming Council (BGC), with the findings fitting their narrative, it’s clear that one of the outcomes of the RGD increase has been for betting sites and online casinos to lower the RTP rates of their games.
This RTP, which stands for Return to Player, generally determines how much of their stake a player can expect to win back in a single session – lower RTPs mean that, in theory, players are getting a weaker deal from their gaming.
That perhaps explains their migration to unlicensed sites abroad, which aren’t experiencing the same regulatory headwinds as legitimate operators. Black market casinos also aren’t subject to other areas of UK legislation, such as maximum stakes – those were cut to £2 and £5, respectively, depending on the player’s age, last year.