Written by Kunal Sawhney, CEO, Kalkine
A report from The Observer is doing the round that three of Britain’s top betting companies lobbied Treasury officials against a proposed industry crackdown. It has been reported that top executives of Bet365, Ladbrokes, and Paddy Power met officials from the Treasury and Revenue and Customs; they are said to have warned that a radical move on the tax front would cost millions of pounds in lost tax receipts to the exchequer as tightening up of the gambling laws can drive gamblers to the black market.
What is the expected crackdown?
It has been reported that the government is working on a white paper that will be released soon and aims to completely overhaul the gambling industry. It has been reported that the government would introduce safer gambling mechanisms, including affordability checks on punters, through the new crackdown.
For a long, there has been a demand for greater regulation of gambling in the country, even at the cost of profit, as gambling harm has become a real concern in the UK context, and as per some reports, on an average, a problem gambler commits suicide every day.
Gambling and tax implications
In principle, the UK has no tax on gambling, though the government takes it directly from bookies in the form of consumption tax. Casinos and other betting sites in the UK, instead of paying taxes on their profits, pay a 15 per cent tax on remote gaming revenues. Business in the country is presently monitored by the UK Gambling Commission (UKGC), under the direction of the DCMS (Digital, Culture, Media, and Sport). For citizens or the players also, the nation offers tax-free gambling winnings, contrary to what players in other countries, such as the USA and France, pay anywhere between 1% to 25% in gambling taxes.
From 2001 to 2021, there has been a constant increase in betting and gaming tax receipts in the United Kingdom. The industry that was paying around £1,510 million in 2001 paid more than double to around £3,074 million in 2021. Since 2007, when the Gambling Act 2005 came into force, the government has been generating a decent amount of revenue from gambling taxes.
Online betting is less regulated than betting shop gambling in the UK. All the betting companies with an online presence have to pay 21% income tax on the gross profits that they generate from the domestic activities of their customers.
Industry warns of lost tax receipts
The Betting and Gaming Council (BGC), one of the lobby groups for the gambling industry, which claims to represent and regulate around 90% of the gaming and betting industry, is up in arms against tightening gambling rules and has warned that there is a possibility that the levy of over £3 billion a year paid by it to the Treasury could be impacted if stringent measures were brought in. It has been argued that the actual threat is from unlicensed and illegal gambling operators.
The past two years had seen an unprecedented change in the gaming and betting habits when the nation and the whole world were suffering the onslaught of coronavirus. When the gaming venues were closed, initially there was a reduction in overall gambling in the initial days due to limited access to gambling within the UK. However, with the online presence, the gamblers moved to far riskier online casinos and slot games, and the pandemic served to promote this gambling format, which resulted in a many-fold increase in their business. Hence, if a safer mechanism is on the anvil, it should be welcomed by all, and a meaningful way needs to be found for the problem gamblers.