The British gambling industry emerged unscathed from the 2024 UK budget, as fears of a punitive tax hike on the sector proved unfounded.
Chancellor Rachel Reeves delivered the financial plans for the country on Wednesday, the first Labour Party budget in 15 years, announcing tax increases of around £40 billion ($51.9b).
She insisted the measures were necessary due to a £22b black-hole left by the previous Conservative government at Westminster, but their outgoing leader Rishi Sunak hit back accusing Labour of “fiddling the figures” and reneging on manifesto pledges not to increase taxes.
Earlier this month, UK Treasury officials were said to be weighing up proposals from two “influential” think tanks to raise up to £3b in taxes from the gambling industry as part of a push to shore up a massive shortfall in public finances.
Understandably, the markets reacted negatively. On the back of the reports, stocks nosedived in early trading on October 14 as Entain’s shares dropped by as much as 14%, and Flutter – owner of Paddy Power and Betfair – slumped by 6%.
Gavin Isaacs, the chief executive of Ladbrokes and Coral parent company Entain said ministers should be wary of the impact of a “punitive” tax hike on gambling due to the knock-on effect on the wider economy.
The outcome proved to be different with many fears allayed.
Reform could take years, while the markets reacted positively
Instead of a significant raise in taxes, the British government intends to press ahead with reforming the online gambling tax structure but the lobbying and change process will take a long time.
A remote gambling duty is envisaged, aligning betting services offered online with those via television, telephone, and radio. This could create a single tax aimed to close existing loopholes in the system.
UK mid-cap shares were buoyant on Wednesday, with small-cap stocks seeing a greater surge.
As reported by Reuters, by late afternoon, the mid-cap FTSE 250 index was up by 0.4% having risen 1.7% during the budget speech, while the FTSE 100 barely moved from the day’s opening.
Small-cap stocks among the FTSE AIM index spiked by almost 4%, on track for the course biggest one-day rally since April 2020.
Image credit: Via Midjourney
