Gavin Isaacs, the chief executive of Ladbrokes and Coral parent company Entain has reacted with fury following reports suggesting the Labour government is set to hit the sector as part of a drive to raise £3 billion in taxes.
With the sentiment shared across the British gambling industry, he 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 head of one of the United Kingdom’s leading betting firms said such a move would jeopardize thousands of jobs and strike a direct blow to horseracing and funding for other sports, including sponsorships.
In July this year, Isaacs was confirmed as the replacement for the outgoing Jette Nygaard-Andersen who was mired in a long-running bribery scandal that hampered the company, contributing to a downward spiral that resulted in significant losses of hundreds of millions for Entain.
After taking up the chief executive position at the top table last month, he said of the potential increased liabilities:
“We’d ask ministers to be mindful that further punitive tax increases would have a material detrimental impact on the economic contribution of the gambling industry, put thousands of jobs at risk, reduce funding for horseracing and other sports, as well as benefiting the black market.”
The Guardian reported on Friday 11 October that UK Treasury officials were considering elaborate 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 black hole in public finances.
This would include doubling the existing levies placed on some bookmakers operators and casinos.
A paper from the Social Market Foundation (SMF) would see online gaming taxes spike by £900m, while a separate proposal from the Institute for Public Policy Research (IPPR) would raise an array of duties placed on the sector by nearly £3bn.
While the response from the gambling lobby isn’t a surprise, the government’s position will be cognizant of the harm caused by problem gambling and a desire to address the issue.
Online casino style gambling has surged in recent years. It's more likely to lead to problem gambling than other forms. And it's under-taxed relative to other countries.
Doubling the duty on online gambling would raise £900m.https://t.co/vi0oPupUO5
— Theo Bertram (@theobertram) October 11, 2024
UK Chancellor’s comments allay the worst fears
The reaction from the markets was cold, to say the least, on the following Monday, as shares nosedived.
In early trading on October 14, Entain’s shares dropped by as much as 14%, and Flutter – owner of Paddy Power and Betfair – slumped by 6%. Overall, Entain, Flutter, Evoke, and Rank were said to have lost a collective £2.4bn in market capitalization on the day.
Analysts reacted with caution, stating the government is unlikely to opt for the higher range of proposals but intimated the gambling industry should prepare for increased taxes and more stringent regulations moving forward, with Sir Keir Starmer’s administration set to deliver its first budget on 30 October.
The UK Chancellor Rachel Reeves sought to allay the worst fears of key industry figures like Entain’s Isaacs, as she downplayed the prospect of a massive tax hike at an event in London on Monday.
“We’re proud of those businesses choosing Britain as a place to invest and create jobs,” she said at an international investment event.
“We want a competitive tax system for all parts of our economy,” added Reeves who went on to welcome the presence of Sky Bet in the capital, paying “decent wages” and providing jobs.
Image credit: Via Abite
