Treasury committee recommendations to raise gambling duties would 'decimate' racing

Racing will be decimated if recommendations published by a select committee to raise gambling duties are implemented, an industry source has warned.

The claim comes following the publication of a report by the Treasury committee, which last week held an evidence session on the taxation of gambling as part of its work looking at some of the decisions facing chancellor of the exchequer Rachel Reeves in the budget she is due to deliver on November 26.

Reeves has previously signalled that gambling duties are set to rise, an issue which has caused huge concern in British racing.

Last month, 363 figures from across the sport signed an open letter to the chancellor spelling out the "irreversible consequences" to British racing's finances posed by an increase in general betting duty (GBD) to match other gaming duties.

• Why Britain risks repeating a Dutch disaster by raising gambling taxes 

The select committee's report recommends changes to machine games duty (MGD) and remote gaming duty (RGD), rather than GBD, arguing the Treasury should ensure they are always set at a higher rate than the gaming duty levied on casinos "to take account of the different harms caused by different types of gambling".

That could mean MGD and RGD more than doubling to at least 50 per cent. Bookmakers have warned that such an increase to MGD, which is levied on the machines found in betting shops, would lead to widescale closures and racing having more than £20,000 in media rights and levy payments taken away for every shop lost.

The committee's chair Dame Meg Hillier conceded that gambling at a racecourse or seaside arcade is "a fun pastime enjoyed with family and friends", but claimed the gambling industry was "hiding its more insidious parts behind the friendly facade of its traditional, cultural forms".

She said: "We are urging the government not to cave in to industry scaremongering and to tax online betting games at a rate that reflects the level of harm they inflict." 

However, a gambling industry source said: “Meg Hillier is thinking in headlines and not thinking it through. Her demands would decimate racing – the very thing she says she wants to protect."

The committee, which is a parliamentary rather than a government body, recommended that ministers "must examine how to tackle any black-market gambling".

It also said the Treasury "must review whether additional anti-avoidance measures are needed, including in respect of the use of low-tax jurisdictions by the gambling industry", a reference to companies with operations based in places like Gibraltar.

Grainne Hurst: "Much is at stake in the chancellor’s budget."

Betting and Gaming Council chief executive Grainne Hurst, who gave evidence at last week's committee hearing, said that further tax increases on the regulated online sector risked pushing players to the black market, reducing tax revenues and cutting funding to sports including horseracing.

She said: "It’s also important to remember that all online betting and gaming in Britain is already taxed on a 'point of consumption' basis. Meaning duty is paid on every bet placed by a UK customer, regardless of where the operator is based. This ensures the exchequer receives its fair share and that British consumers are protected under UK regulation.

“Much is at stake in the chancellor’s budget. Get it wrong, and it’s not just jobs and growth that will suffer, it’s safer gambling itself. To protect consumers and support a safer, stronger industry, we must keep gamblers playing within the regulated market."

Responding to the report, a spokesperson for the UK and Ireland division of Paddy Power and Sky Bet owner Flutter Entertainment said a tax rise was "not a free hit" and would be "a gift to the black market".

They added: “The committee appears to be suggesting machine gaming duty and remote gaming duty should rise to at least 50 per cent.

"It’s not scaremongering to suggest tax rates like that could have a significant impact on the industry, jobs and investment."

Separately, the Gambling Commission published a paper on Thursday in which it said it was "not yet able" to make an estimate of the scale of the illegal gambling market, claiming that "methodological challenges" meant confidence in any single estimate is "inherently constrained".

Andrew Rhodes: Illegal online gambling "remains a serious threat"

Chief executive Andrew Rhodes said: “Illegal online gambling remains a serious threat to consumers and to the integrity of the regulated market. 

“While measuring the full scale of the problem is complex, our understanding is growing — and so too is our ability to disrupt illegal operators."

Read these next:

Why Britain risks repeating a Dutch disaster by raising gambling taxes 

Leading independent bookmaker warns 'there will be nothing left to tax' if gambling duties are hiked in autumn budget 

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

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