Online gambling companies are set to face an increase in taxes aimed at addressing gambling-related issues, while bingo establishments will see a positive change in their tax status.
The decision was confirmed by Chancellor Rachel Reeves, who announced that the remote gaming duty will rise from 21% to 40% starting in April of the following year. This sector already contributes significantly to the Treasury, generating £1 billion annually.
According to the Office for Budget Responsibility, doubling the tax rate is expected to bring in an additional £1.1 billion yearly by 2029/30. The IPPR think tank had suggested raising the duty to 50%.
Starting in April 2027, a new general betting duty rate of 25% will be introduced for online gambling. Reeves emphasized that protections have been put in place for horse racing, with remote bets on races excluded from the new 25% rate.
Additionally, bingo halls will benefit from the removal of the 10% duty previously applied to the game.
Former Labour Prime Minister Gordon Brown advocated for targeting under-taxed profits to raise funds to alleviate child poverty. The Treasury highlighted the need to regulate online gambling due to its growth and potential harm it can cause to individuals.
However, the OBR projected that players might bear the brunt of the online tax hike, as operators are likely to pass on around 90% of the duty increase through higher prices and reduced payouts.
Dame Meg Hillier, chair of the Treasury Select Committee, praised the Chancellor’s decision to align the tax rate for remote betting with the harm it can cause, especially with addictive casino games. She emphasized the importance of protecting cultural contributions from sectors like racecourses and bingo halls while addressing the risks associated with online gaming.
Industry experts like Adam Rivers and Brant Dunshea welcomed the changes, acknowledging the impact on different sectors within the gambling industry and the government’s efforts to strike a balance between revenue generation and social responsibility.