Labour MPs call for gambling tax hike that could be 'death knell' for betting shops

Britain's betting shop estate could be wiped out if chancellor of the exchequer Rachel Reeves takes heed of calls backed by more than 100 Labour MPs to hike gambling taxes, the government has been warned.

Such a move would smash tens of millions of pounds from racing's income in lost media rights payments and levy.

Greg Knight, managing director of leading independent bookmaker chain Jenningsbet, said the "the whole industry would cease" if the mooted increases were applied to the retail sector.

The news follows a letter sent to Reeves by the Labour MPs, headed by Beccy Cooper and Alex Ballinger from the Gambling Reform All-Party Parliamentary Group (APPG), calling for increased taxation of gambling, with the revenue ringfenced "to help address child poverty and related harms".

Although the letter calls for a "targeted levy on online gambling", the APPG subsequently confirmed to the Racing Post that the MPs were writing in support of proposals made by former prime minister Gordon Brown. Those would also affect the betting shop sector.

Brown's plans, based on a report this year from the Institute for Public Policy Research (IPPR) think tank, proposed increasing remote gaming duty on online games of chance to 50 per cent from 21 per cent, and machine games duty (MGD), levied on in-person gaming machines such as those in betting shops, to 50 per cent from 20 per cent "to achieve parity with their online equivalents".

Brown also called for general betting duty (GBD), which is levied on bets both online and in shops, to be increased to 25 per cent from 15 per cent. The MPs' letter quotes an even higher figure of 30 per cent from a previous IPPR report.

Both Brown and the MPs called for racing to be spared from increases in betting duty, with the MPs writing that the sport should be "protected through a differentiated tax approach that reflects its social and economic importance".

However, that would not protect the sport from the impact of the loss of betting shops, should the sector be hit by swingeing tax increases.

Greg Knight: proposed figures "would close every betting shop in Great Britain at a stroke"Credit: JenningsBet

Knight said: "The carve-out for racing would be entirely meaningless because the demise of shops would mean catastrophic reduction in levy, media rights and sponsorship. It's the death knell for racing as well as high street bookmakers."

The Treasury has already consulted on controversial proposals to harmonise online gambling duties, something British racing has estimated could cost the sport £66 million per year, and the government's plans are set to be outlined in November's budget.

Reeves said: “I didn’t need MPs or former chancellors to tell me to launch an inquiry into gambling taxation. I did that as chancellor, and I’ll set out the plans on the taxation of gambling – and indeed of other areas – in my budget on November 26.”

Asked what the impact of the figures proposed by Brown and the MPs would be, Knight said: "Based on those figures, and they could be pure speculation, that would close every betting shop in Great Britain at a stroke. 

"Where do all those people go who have used a betting shop for years? It's the black market. It's the worst idea I have ever heard of in terms of betting taxation because the idea that we are all going to sit there, carry on our business and just make a little less profit is absolutely foolish."

He added: "We need to be on our guard that retail does not get swept up with online by people who don't understand the difference. If they are going to come for retail, I don't exaggerate, the whole industry would cease. You lose all of that income and you have suddenly got thousands of people out of a job."

Paul Leyland of industry analysts Regulus Partners estimated that Britain’s betting shops would generate around £350m in Ebitda (earnings before interest, taxation, depreciation and amortisation) this year but that an increase in MGD to 50 per cent would cost the industry an additional £350m, while an increase in GBD to 30 per cent, even excluding horseracing, would cost around £116m. That means the proposed tax increases would cost the industry 1.3 times their profits “before the capital expenditure which is vital to keep shops open”.

Leyland added : “For shops to survive, they would need to be making Ebitda margins in excess of 30 per cent just to absorb a tax hit of this magnitude, which is not the reality for the vast majority of high street shops.”

Betting shop numbers in Britain have fallen from nearly 9,000 in 2015 to less than 6,000 in 2024, according to Gambling Commission figures.

Leyland estimated that it was unlikely that more than 20 per cent of shops would survive the likely cost increase, with tax receipts falling and around 30,000 high street jobs lost. He added that British horseracing generates around £100m in media rights and around £40m in levy from betting shops.

Leyland said: "While the letter proposes excluding horseracing from the tax, betting shops have to be viable businesses to pay the levy – betting shops which are closed cannot contribute anything. 

"The closure of 80 per cent of betting shops would destroy access for most punters, meaning only around five percentage points is likely to be recovered in the shops which remain open – horseracing will likely therefore lose around 75 per cent of this vital income despite being directly protected."

The Betting and Gaming Council also noted the potential impact on racing. A spokesperson said: "Any further tax increases on the regulated betting and gaming sector would hit punters hard, as well as risk betting shop jobs, investment, and the vital funding our members provide to sport, including more than £350m a year to British horseracing.

"BGC members already contribute £6.8 billion to the economy, pay £4bn in taxes, and support 109,000 jobs. Any further increase in taxes on our members, so soon after a white paper which cost the sector over a billion pounds in lost revenue, will also not raise more money for the Treasury."

Read these next:

Claims that racing is working closely with anti-gambling lobby are 'simply inaccurate' says BHA 

Iain Duncan Smith: racing must be given 'careful consideration' in gambling tax reforms 

Hong Kong Jockey Club CEO warns proposed tax rise could see British racing come to 'significant harm' 

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