A Serious Warning
A proposed overhaul of the UK’s online gambling taxation system has triggered concern across the regulated betting sector. YouGov survey data suggests that two-thirds of British bettors would consider turning to unlicensed operators if the cost of betting rises.
The BGC has described the survey findings as a serious warning to the UK government. They suggest that such a policy shift could inadvertently boost the gambling black market in the UK. The black market already accounts for a lot of betting spending in the country. A recent BGC-commissioned study revealed that British bettors spend an estimated £2.7 billion a year with unlicensed online operators.
The warning comes amid an ongoing consultation period by HM Treasury announced in April and launched in May. It proposes that the current three-pronged online gambling tax structure should become a single overall duty.
Currently, Remote Gaming Duty (RGD) is levied at 21% of operator’s profits, while General Betting Duty (GBD), and Pool Betting Duty (PBD) are taxed at 15%. The consultation, which is scheduled to close on 21 July, is yet to specify what the rate of the unified Betting and Gambling Duty might be.
Strong Opposition
The Betting and Gambling Council (BGC), the UK’s standards body for betting and gambling, voiced strong opposition to a potential increase in tax rates.
Citing new data from a YouGov survey, the BGC said that 65% of players indicated they would be more likely to seek out unregulated betting sites if the new tax regime results in higher costs for them. Passing the cost to consumers would involve less competitive odds and possibly reduced choices for customers.
Unforeseen Consequences
There is also concern over the broader consequences of the potential tax hike, especially for smaller betting companies. Melanie Ellis, a partner at Northbridge Law, noted that some large operators might be able to withstand a modest increase in tax rates. However, many smaller and newer firms already operate on tight margins and may not be able to absorb additional costs.
She suggested that firms unable to sustain profitability under a higher tax rate may have to cease operating, therefore contracting the market. A smaller market means larger operators have less incentive to offer competitive pricing.
Ellis added that a reduced regulated market could create more space for illegal operators to fill the gap. She expressed concern for the most vulnerable consumers in this case. Unlicensed and unregulated betting sites often operate from overseas and are not subject to UK gambling laws or oversight by the UK Gambling Commission. As a result, customers receive less protection.
The BGC has warned that pushing more consumers to the black market will weaken funding streams for sports like horse racing, which rely on contributions from legal activity. More market share for the unregulated sites also means less tax collected. The organisation also suggested that these proposed changes are at odds with Labour’s wider economic policy of growth.
