Budget gambling tax warning - what is on the cards and what it means for you
Arcade operators have become the latest to warn about the impact of a proposed gambling tax hikes - but just what is being proposed and what could the impact be?
Every one of Britain’s seaside arcades could close if gaming taxes are hiked, the industry has warned.
Bosses claim all 400 venues risk being forced to shut if slot machine duty were to more than double from 20% to 50% in a move, they say, would “completely decimate coastal towns”. Any such leap could also lead to the closure of high street gaming centres, plus hit the takings of pubs and working mens clubs that have fruit machines, they say.
The warning comes as the gambling industry stepped-up efforts to prevent tax hikes in next month’s Budget. Former Labour PM Gordon Brown backed proposals from think tank the Institute for Public Policy Research to target the “undertaxed” gambling industry, with the estimated £3.2billion raised helping to tackle child poverty. Labour’s manifesto vowed to reduce gambling-related harm and update 20-year-old regulations since when online betting has boomed.
However, there are concerns proposals aimed at combating gambling addiction, especially online, could unintentionally hammer other forms of betting that people have enjoyed for generations. The horseracing industry is among those up in arms about the knock-on impact of a tax raid on bookies when it comes to prize money and sponsorship.
Joseph Cullis, president of Bacta, the trade body for seaside arcades and adult gaming centres, warned if the current 20% machine games duty jumped to 40% or 50% “the industry goes.” He added: “These are community-based businesses - often run by the same families for generations - that provide local jobs, support tourism, and bring life to the UK’s high streets and seaside towns.” One operator the Mirror spoke to warned the impact would be “catastrophic.”
Mr Cullis, who runs three sites in Dumfries and Galloway, said slot machines help sustain seaside arcades in the off-peak months. He said many venues are already struggling with rising costs and that even popular destinations, such as Blackpool, could be left reeling.
A Treasury spokesperson said: “The Chancellor has been clear that at the Budget she will strike the right balance between making sure that we have enough money to fund our public services, whilst also ensuring that we can bring growth and investment to businesses.”
What’s on the cards?
The main focus is proposed gambling tax hikes from think tank the Institute for Public Policy Research to tackle both gambling harm and childhood poverty.
Betting firms are subject to different levies. The biggest earner for the Treasury is the remote gaming duty, largely levied on the profits from online operations, which generates £1billion a year. The IPPR recommends more than doubling it from 21% to 50% to collect another £800million. Meanwhile, the machine games duty raised nearly £590million and is levied on physical machines that pay out money, everything from slot and fruit machines to “penny drop” games in arcades. Raising the 20% rate to 50% could up the tax take to £900million a year, the IPPR says. And raising the general betting duty from 15% to 25% could raise another £500million, while excepting horse-racing. The proposals avoid any changes to bingo or lottery duties.
Ex-PM Gordon Brown says gambling firms are 'undertaxed', is he right?
Most forms of gambling in the UK are except from VAT, which critics say gives them an advantage, and some operators are doing better than others. Paddy Power owner Flutter is forecasting its annual profits will surge by around 40% to £2.45billion. Peter Jackson, Flutter’s chief executive, saw his pay and perks package balloon to nearly £16million last year. Rival Bet365 made profits of almost £600million last year. Founder Denise Coates and her family are worth an estimated £9.45billion.
If horse-racing would avoid direct increases, why is the industry unhappy?
The industry relies heavily on prize money and sponsorship from bookies and gambling firms, so risks losing out from any fresh tax raid on their profits, so the argument goes.
Why are bingo hall operators unhappy too?
The IPPR recommends not changing the current 10% bingo levy. But operators say a big chunk of the revenues bingo halls make - in some cases well over half - comes from slot machines. Most bingo firms also have online arms, which are subject to remote gaming duty. They argue any include in the remote gaming duty and the machine games duty will mean less to invest in bingo halls.
Is the aim of the changes to raise taxes or tackle gambling addiction?
It has been framed as the latter, while also raising money to fund a possible lifting of the two-child benefit cap. But industry insiders say it’s hard to target the most addictive forms of gambling, including online casinos, without unintentionally impacting other less harmful pursuits. One solution could be to lower or scrap bingo and horse-racing specific duties.
Will punters end up paying the price?
That’s one of the industry’s arguments, claiming players will get worse odds or end up in the arm of black market firms. Various firms have also warned of the mass closures of betting shops. Critics say the black market risk is overblown, given gambling firms need a licence to operate in the UK. And they claim firms can choose to swallow smaller profits.