Under the scrutiny of the tax authorities: Is the gambling industry facing tax increases?

The gambling industry, known for its exciting advertising claims about unlikely winning odds, could soon face a significant tax increase. Finance ministers are currently considering using tax revenues of up to 3 billion pounds to bolster the state treasury in order to close the alleged financial deficit of 22 billion pounds. Two influential think tanks are proposing a drastic increase in taxes on online casinos and bookmakers. These measures could be introduced in this month's budget, the first budget planning by the Labour government in 14 years. However, according to reports by the Financial Times, the government does not seem to be considering such drastic steps, possibly due to the vigorous opposition from the gambling industry. Industry experts warn that drastic tax increases could threaten the profitability of bookmakers and further promote illegal markets. Analysts from JPMorgan and Barclays fear that such increases could especially push smaller providers out of the market and lead players to turn to illegal online gaming venues. The proposed tax changes are the subject of heated debates: The Institute for Public Policy Research and the Social Market Foundation each propose tax rates of up to 50 percent on online gambling—a significant increase compared to the current rates. While the feasibility of these proposals is questioned by analysts, the gambling industry remains on high alert. The economic impact on operators like Flutter, Entain, and Evoke, who are heavily involved in the UK market, could be substantial. Analysts from Citi and Morgan Stanley predict that cuts in advertising and worsening betting odds could serve as mitigating measures to cushion the effects of such tax increases. The discussion about gambling taxes and regulation is not new: In the past, similar proposals have revolved around job protection and the future of horse racing. Despite the potential for changes in gambling regulation, the power of the lobby remains strong, making significant reforms unlikely.