Racing faces ‘stealth tax’ if chancellor hits betting shops in budget, bookmakers warn

Racing's finances risk being damaged by a "stealth tax" despite a report suggesting the sport would be spared from increases in gambling duty in the budget, bookmakers have warned. 

The Daily Telegraph reported on Monday that the tax rate on sports betting, including racing, would not be increased on November 26, but that rates paid on Fixed Odds Betting Terminals and online casino-style games would go up in a £1 billion tax raid on the industry.

The betting industry has repeatedly warned that any increases to gambling taxes would impact racing's finances. Racing is particularly heavily exposed to betting shop closures. Industry analysts Regulus Partners has estimated that shops provide £100 million in media rights and £40m in levy to the sport annually, meaning each closure of the approximately 6,650 shops in Britain and Ireland costs the sport more than £20,000.

One betting industry source said on Monday that shops were in a “very fragile” position and would be threatened by tax rises. A second source added: “Racing needs to be careful that it is not being talked into accepting a stealth tax on the sport. Here you could have something that looks palatable to racing, but these taxes cannot be uncoupled and there will be knock-on effects for the sport if any of the rates rise.”

Several bookmakers have in recent weeks publicly warned that tax increases would result in shop closures. Betfred chairman Fred Done claimed all 1,272 of his firm's shops would close if rates increase, while Entain, the owner of Coral and Ladbrokes, and Evoke, the operator of William Hill, has also warned shops will be shuttered. 

• Fred Done warns all Betfred shops may close with 7,500 jobs at risk if gambling taxes hiked 
• Why William Hill could close up to 200 betting shops - and how fear of gambling tax rises is a driving factor 

During September’s Labour Party conference, chancellor Rachel Reeves said gambling firms “should pay their fair share of taxes”, while a Treasury consultation on harmonising the rates paid by bookmakers on sports and online games of chance took place through the spring and summer.

The Treasury proposal prompted racing, led by the BHA, to launch its ‘Axe The Racing Tax’ campaign, which featured the unprecedented decision by the sport to voluntarily cancel live action on September 10 as a signal of how seriously any tax increase would impact its future.

Chancellor of the exchequer Rachel Reeves will unveil her budget on November 26Credit: Leon Neal

While the campaign may have deterred the Treasury from going ahead with its harmonisation proposal, bookmakers have warned the sport is susceptible to knock-on impacts from other rate increases, as firms move to protect profit margins by withdrawing bonuses and marketing and offering worse odds.

Direct funding to help promote racing has already been shelved by Flutter Entertainment, the parent company of Paddy Power, Betfair and SkyBet, with the firm pulling its £1m backing of the Champions: Full Gallop docuseries. 

The Levy Board has also paused its support for the programme with spending decisions under review over concerns of how tax rises could impact the amount it receives from bookmakers.

In response to the latest reports, a Flutter UK and Ireland spokesperson said: “Any increase in business tax, on gambling or any other activity, is not a free hit and will have obvious consequences on jobs and investment. 

“An increase in either gaming duty or machine gaming duty will significantly impact the amount betting operators can reinvest back into sports such as racing.”

Betting shops could close if there is a tax hike, bookmakers have repeatedly warnedCredit: David Cramphorn

The BHA said it would continue to lobby for measures that protected the sport’s income, with financial modelling commissioned by the authority showing increases in general betting duty would cost racing upwards of £66m a year.

A spokesman said: “We do not wish to comment on speculation ahead of the budget, which is still three weeks away. 

“The ‘Axe The Racing Tax’ campaign has consistently called on the Treasury to drop its proposals – as set out in its consultation paper published in April – to harmonise online gambling duties into a single rate due to the unintended and devastating consequences this would have for British racing. 

“We are continuing to focus on ensuring this message is heard within government in advance of the budget.”

Read more:

Committee fails to get to grips with the nitty-gritty of gambling tax - but events may have overtaken it anyway 

MPs warned customers would be lured to black market if chancellor opts to increase gambling taxes in next month's budget 

British racing unites as 363 sign open letter urging chancellor to abandon betting tax hike 

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