Bookmaker warnings about budget show racing will not be immune from impact on wider gambling industry

Major gambling operators have largely refrained from public comment on the prospect of gambling tax rises in next month's budget, but things have changed in recent days.

Stella David, chief executive of Ladbrokes and Coral owner Entain, told The Times last week that higher taxes on the industry would lead the company to "consider its investment level in the UK".

David also warned that there was "no doubt" the company would have to consider betting shop closures, depending on how great the tax rises are and on which duties they fall.

Betting shop closures were also threatened in an article in The Sunday Times at the weekend outlining the issues facing William Hill owner Evoke, with up to 200 shops potentially shutting and with them the loss of up to 1,500 jobs.

A spokesman for Evoke was quoted as saying the company was "continuously reviewing" its betting shop estate.

He added: "As part of our ongoing planning, we are assessing the potential impact of different tax scenarios on our UK operations. This includes the difficult but necessary consideration for further shop closures."

Such statements make for worrying news for betting shop staff across those three famous high street names, and should also concern British racing's leadership.

Punters may have increasingly moved online but bricks-and-mortar shops still generate around 40 per cent of racing's betting-related revenue through media rights and levy, according to analysts Regulus Partners.

Plumpton racecourse has called on the BHA to back proposals it has submitted to the TreasuryCredit: Edward Whitaker (racingpost.com/photos)

It was against this backdrop that Plumpton racecourse submitted a report called Securing Racing's Future for the consideration of the Treasury and called for the BHA to support its proposals.

The document recommends that the government adopt proposals from the Social Market Foundation (SMF) think tank which would change the current regime of the 15 per cent general betting duty (GBD) and ten per cent levy imposed on bets on British racing, so that the levy is doubled to 20 per cent and the Treasury receives just five per cent in GBD.

That, along with ten per cent of the duties raised through betting on international racing being diverted to the levy, could raise an additional £130 million for the sport, the report claims.

In an open letter to the new BHA chair Lord Allen, Peter Savill and his son Tom – chair and director at Plumpton respectively – exhort the governing body to support the proposals, claiming they already have the backing of politicians, including former prime minister Gordon Brown.

"If the government completes its review without a clear and united proposal from racing to support the redistribution of the tax and levy on British horseracing, the opportunity will be gone," they wrote.

Wisely, Plumpton's proposals stick purely to racing's own position and do not touch upon possible tax regimes for other areas of the industry.

The problem is that racing does not operate in a silo and, as the comments from Entain and Evoke demonstrate, what happens elsewhere in the industry is bound to have an impact on the sport.

The SMF's proposals also call on the government to raise GBD to 25 per cent and remote gaming duty to 50 per cent. Anything even approaching that would lead to racing being hit as operators tighten their belts by reducing marketing and offers, and giving less generous odds.

Plumpton's letter to Lord Allen remarks that the BHA's lack of comment about the SMF's proposals regarding racing is "notable", but it is not a surprise that the governing body is staying on the sidelines.

There is increasing irritation among gambling operators at what they regard as support from some in racing for the industry's opponents. That might manifest itself not only in the short term following the budget but also when the next round of media rights negotiations starts in the next few years.

It is also unfortunate timing that Plumpton's call should come just as millions were being spent at Tattersalls. While such activity does not reflect the reality of either the breeding or racing industries, it does give the superficial impression of a sport that does not appear to be in crisis.

Such things are noticed in government. Gambling minister Baroness Twycross referred to the results at the December Mares Sale at Tattersalls when she spoke at a parliamentary reception in January.

Whether the chancellor listens kindly to the proposals regarding the levy or not, the wider landscape facing the gambling industry suggests the situation is far from being as straightforward as is hoped. 

Shares in US gambling giants slide as fresh rivals emerge

DraftKings and Flutter Entertainment's FanDuel are the dominant players in the US, but their share prices have taken something of a battering in recent weeks due to a potential new rival.

Views differ on the threat posed by prediction markets to the established sports betting operators in the US, but they are causing disruption.

The largest prediction market, Kalshi, topped £1 billion in monthly trading volume in mid-September, seemingly driven by the new NFL season.

Prediction markets, in which punters buy an event contract on whether something will happen or not, came to prominence during the last US presidential election. They are similar to exchanges in that they are made up of people betting against each other with an operator taking a cut in the middle.

Sports betting is licensed on a state-by-state basis in the US and is still not legal everywhere. By contrast, prediction markets are regulated on a federal level by the Commodity Futures Trading Commission (CFTC), making them available across the nation.

Flutter and DraftKings shares first took a hit when Kalshi launched a same-game parlay, or bet-builder product, for a Monday night NFL game, dropping by ten per cent and 12 per cent respectively.

There were further dips last week when it was announced that Intercontinental Exchange, owner of the New York Stock Exchange, had invested $2bn in Kalshi's main rival Polymarket and then again after Kalshi had raised $300 million in a funding round.

Flutter chief executive Peter Jackson said he was "pretty sanguine" about the chatter surrounding prediction markets

"There’s a lot of news flow in this space and I’m pretty sanguine about it," was Flutter chief executive Peter Jackson's reaction at last week's Global Gaming Expo in Las Vegas.

Flutter itself has dipped its toes in the water with the announcement of a joint venture with CME Group to develop a new contracts platform, although that would concentrate on financial transactions rather than sports betting.

The prediction markets face their own issues when it comes to sports betting, with legal action taking place in a number of states. 

Six US senators wrote to the CFTC last week to tell them that sports betting was regulated by states and not them, and that the "continued availability of illegal sport event contracts in all 50 states further reaffirms the need for the CFTC to enforce its own regulations mandated by Congress".

Meanwhile, it has been reported that Kalshi's partner Robinhood has been in talks with the UK's Financial Conduct Authority as it seeks to expand internationally, although the Gambling Commission would be the place to go if it is looking at sports betting.

Barber's bullets

Allwyn and OPAP agree deal to create gambling giant

National Lottery operator Allwyn has agreed a merger with Greek company OPAP, which is set to form a €16 billion global gambling giant.

The two companies claim the deal will create the second-largest listed gambling operator in the world.

Allwyn's founder and chair Karel Komarek said: "We're on a mission to build the world's leading global gaming entertainment company, and this transaction takes us one step closer to that goal."

Gambling Commission announces new deposit limit rules

New deposit limit rules set by the Gambling Commission are to be phased in from the end of this month.

Previously announced changes, including prompts for customers to set a financial limit before they make their first deposit and reminders every six months to review account and transaction information, come into force.

From June 30 next year, all online operators must provide customers with the opportunity to set a deposit limit based solely on the amount they pay into their account over a set duration, while they will also be able to offer different caps, such as maximum losses or limits where withdrawals are also taken into account.

US college sport body moves closer to allowing students to gamble

The National Collegiate Athletic Association (NCAA) has adopted a proposal which moves it closer to allowing student athletes and athletics department staff members to bet on professional sports. 

The move comes with the NCAA investigating a number of alleged betting incidents by student athletes in recent years, although under the proposals the current prohibition of betting on college sports would remain.

"Abstinence-only approaches to social challenges for college-aged individuals are often not as successful as approaches that focus on education about risks and open dialogue," said Dr Deena Casiero, the NCAA's chief medical officer.

Date for the diary

Wednesday: Entain delivers its latest trading update, while its US joint venture BetMGM reports on Tuesday. David Brohan, gaming and leisure analyst at stockbrokers Goodbody, said in a note last week that they expected "momentum to continue".

Read these next:

Doubts remain over recent survey findings but problem gambling figures come at a sensitive time 

Confused? You bet they are! How Labour MPs' calls for gambling tax hike collapse under scrutiny 

It seems to be open season on gambling - but little thought appears to be going into the consequences 

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