The Five Great Myths of the betting tax debate and the One Great Truth - the very real dangers to racing are laid bare

Later this month, racing and betting will discover their fate when the chancellor of the exchequer announces which of the seven gambling duties (among many other taxes) will be increased in the name of addressing the nation’s economic woes. 

Despite claims from activists and lobbyists alike, there are no scenarios where the Treasury can raise a meaningful amount of additional revenue without seriously damaging British bookmaking and horseracing. 

There is a strong risk therefore that the government will enact policies out of political expediency, without fully understanding their impact. In this article, we describe how Five Great Myths of the gambling tax debate have led us to this pass.

The publication this month of the treasury select committee's report on gambling taxation illustrates what has gone so badly wrong with policy discourse. The committee dismissed black market concerns as "industry scaremongering" and urged the government not to cave in to such warnings.

Yet just last month, data from the Netherlands revealed that an increase in taxes had led to the illegal market overtaking the legal market for the first time since online gambling was legalised in 2021. 

The select committee’s willingness to put greater trust in soundbites and think tanks than in hard facts and tax experts is symptomatic of the confused and dysfunctional way that the debate on gambling taxation has been conducted. This is illustrated by the five ‘Great Myths’ of the betting tax debate.

The First Great Myth: harmonisation is about simplification

In May, HM Treasury proposed to consolidate duties for online betting and gaming under a single regime of Remote Betting and Gaming Duty. It claimed at the time that this was a matter of simplification and that it was agnostic about the rate at which the tax would be levied. This was the First Great Myth. 

Given the political impossibility of lowering duty for online casino games, it was obvious that, to achieve harmonisation, betting duty would need to be increased – to at least 21 per cent from 15 per cent. The response – from racing, punters and bookies alike – ought to have been a simple ‘no’. Instead, the consultation was allowed to drift into a divisive debate about where the burden of gambling taxation should fall most heavily.

At this point, the Institute of Public Policy Research and the Social Market Foundation think tanks dusted off their largely ignored tax proposals from 2024. The IPPR called for the duty for betting on racing and sport to increase to 25 per cent from 15 per cent, an increase to 50 per cent from 21 per cent for online casino and bingo, an increase to 50 per cent from 20 per cent for playing slot machines as well as a substantial hike in the effective rate for land-based casinos (with a new marginal rate of 66 per cent). 

The SMF proposals were more modest – but only marginally. Initially, it restricted its demands to hiking duty on betting (shops and online) and online gaming – to the same levels as the IPPR, but it has since thrown slot machines into the mix as well.

The think tanks claimed simultaneously that their proposals would raise substantial additional tax receipts, bolster racing's future and target only the most harmful activities. These were the Second, Third and Fourth Great Myths.

The Second Great Myth: increasing duty rates increases tax revenue

In January 2025, gambling tax in the Netherlands was increased from 30.5 per cent to 34.2 per cent, but this has backfired spectacularly. For the first time, consumer spending in the regulated market (€600m) has fallen below the illegal market (€617m). Rather than raising an additional €200m, as forecast, the tax hike is costing the government money.

Meanwhile, the French organisation, AFJEL, has reported a surge in illegal participation to 5.4 million players, compared to 3.6 million in the licensed market.

Events in the Netherlands and France reveal that, above a certain threshold, tax increases don't raise revenue; they destroy it.

The Third Great Myth: racing will benefit

Betting shops, which have been targeted by both the IPPR and SMF, already operate on thin margins, while balance sheets have still not recovered from the lockdown policies of 2020 to 2021. In the first half of 2025, Entain generated a profit margin of 13 per cent across its 2,700-strong estate of Ladbrokes and Coral shops.

The IPPR proposes a doubling in the blended rate of duty in these outlets by hitting both betting and machine play. Basic maths dictates that this would put thousands of shops at risk. In addition to a substantial loss of jobs (dismissed with Antoinette-style insouciance by campaigners), the effect on racing’s finances would be devastating. 

Entain generated profit margin of 13 per cent across its 2,700-strong estate of Ladbrokes and Coral shopsCredit: Peter Dazeley (Getty Images)

To put this into context, retail betting contributes around £150m to racing each year in levy and media rights payments. Betting shops are an important ‘shop window’ for racing. Without them, it is likely that the sport would also lose a large part of its following.

The Fourth Great Myth: tax increases will reduce harm

The Fourth Great Myth is that the proposed tax increases are targeted towards particularly risky activities and that they will result in harm reduction. The first point is demonstrably false. The think tank proposals would negatively impact all parts of the licensed gambling industry in Britain, except for lotteries. In addition to betting shops and online operations, large numbers of bingo clubs, arcades and casinos would be forced to close as a result of substantial increases in duty, leading to many thousands of job cuts and a loss of enjoyment for millions of customers.

More generally, the think tank claims rely on the contradictory proposition that higher taxes reduce harms from gambling (which are principally financial) while magically leaving spending unaffected. In the Netherlands, the market regulator has flatly rejected this, stating that "a financially driven measure like gambling tax is at odds with the policy objective of offering players more protection”, because it pushes highly engaged bettors into the illegal market.

The think tank proposals would also result in the defunding of gambling disorder treatment services. Since the introduction of a statutory levy in April, the provision of clinics has been pegged directly to spending in the licensed market. Around 90 per cent of all such funding is provided by online betting and gaming and betting shops. Pushing punters into the black market while at the same time pulling the rug out from beneath mental health services constitutes an unusual approach to harm prevention.

The Fifth Great Myth: tax increases are about child poverty

The Fifth Great Myth is that any of this is connected to lifting children out of poverty. As even the IPPR admitted last month, additional gambling taxes would not be ring-fenced for this purpose but would instead disappear into the black hole of public finances. The think tank created an artificial link between two things that it does not like – gambling and the two-child benefits cap. It is nothing more than a political trick.

One Great Truth: don’t let a good crisis go to waste

All of this brings us to One Great Truth. Whatever happens on November 26, there should be no sugar-coating the fact betting and racing are in perilous waters and that the current approach to political risk management is not working. This is one crisis that must not be permitted to go to waste.
Dan Waugh is a partner with Regulus Partners,  a global strategic advisory business focused on the sports and leisure sectors

Barber's bullets

Guy Chadwell named new Plumpton chief executive

Guy Chadwell has been named new chief executive at Plumpton and will take up the position in the new year. Chadwell, whose previous roles included head of betting at Ascot, succeeds Craig Staddon, who is joining the team at Cheltenham.

"I’m honoured to be joining Plumpton at such a pivotal time," Chadwell said. "It’s a racecourse with a proud history, a loyal following, and huge potential." 

Plumpton: new chief executive in Guy ChadwellCredit: Alan Crowhurst

Youth problem gambling rate stable

The proportion of young people experiencing problems with their gambling is 1.2 per cent, statistically stable with the 1.5 per cent reported in 2024, the Gambling Commission said last week.

The Young People and Gambling Report 2025 found that 49 per cent of 11-to-17 year-olds had experienced gambling in the previous 12 months, while 30 per cent of the same age group had spent their own money on gambling, up from 27 per cent. However, the most common types of gambling activity that young people spent their own money on remained those that are legal or not age-restricted.

The commission's executive director of research and policy Tim Miller said: "The research shows it is not children being encouraged or allowed to gamble underage driving this increase – it is the increased participation in gambling that is either legal or does not require regulation, such as private betting between friends."

Betting shop GGY falls

Gross gambling yield (GGY) at betting shops fell by five per cent to £508 million in the three months to the end of September compared with the same quarter last year, while the total number of bets and spins decreased by two per cent to 3.1 billion, according to the latest figures from the Gambling Commission.

The news comes as a number of operators have signalled that they are shutting shops, with more closures possible depending on next week's budget.

Total online GGY for the period was £1.42 billion, an increase of eight per cent from the same period last year.
Bill Barber, industry editor

Dates for the diary

Wednesday: The 35th Cartier Racing Awards will be presented at the Dorchester Hotel in London.

Friday: World Horse Welfare's annual conference takes place in London, exploring the theme 'Through the horse’s eyes'.

Read these next:

Tax proposals 'would close 3,400 betting shops and wipe £84m from racing's income' 

‘Come and see what we do’ - betting shop champion’s message to politicians amid fears of tax hammer blow 

New report warns of black market risk from higher taxes and tighter regulation, industry body claims 

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