Will Gambling Taxes Double Under Labour's New Plans?

It has been barely 101 days since Labour won a landslide general election, and now the chickens are coming home to roost. After the shock of the cold targeting of pensioners over winter fuel payments, the PM came under fire and scrutiny for some of his personal and business dealings. 

Labour took more than £1 million in donations and gifts from gambling firms. The PM and three members of his cabinet have received the money from casinos, on top of tens of thousands in freebies from bookies, records show. 

Government Relationship With Gambling Industry Set to Get Colder

Despite the seemingly warm relationship with the gambling industry, things could about to become decidedly cold as Labour gets set to double gambling tax rates. Under new plans, yet to be formalised, it is expected that the UK’s Labour government could double tax rates on ‘higher harm’ gambling products, including online casinos and casino games. 

The tax could yield as much as £2.9 billion (from 2025 to £3.4 billion in 2030), according to a report by the Institute for Public Policy Research (IPPR).  

How Does Government Raise Taxes?

The government raises taxes to fund essential public services, such as education, healthcare, and defence. Each year, the Chancellor of the Exchequer presents the Budget, outlining proposed tax changes, which are included in the Finance Bill. After the Budget speech, Parliament immediately approves certain provisional tax measures, such as changes to alcohol and tobacco duties, which take effect on Budget day. 

Following this, MPs debate the remaining tax proposals, known as Budget Resolutions, over four days. Parliament’s approval allows new taxes and renewals of existing taxes to be implemented provisionally. The Finance Bill, presented the same day, must be passed to make these tax changes permanent.  

The Finance Bill undergoes line-by-line scrutiny in Parliament, with its most contentious parts debated by the whole House. As a money bill, the House of Lords can only debate it without making amendments. Additionally, select committees, such as the Commons Treasury Select Committee, conduct inquiries into tax proposals and scrutinize the government’s fiscal policies, ensuring accountability and transparency in taxation. 

Government Strapped for Cash but Lottery and Bingo Escape   

The government has to find money from somewhere to make up for a £22 billion deficit that Chancellor of the Exchequer Rachel Reeves claims to have found upon taking office.  

Under the new proposals, the target is clearly gambling products and services in the higher harm category, like sports betting and online casino gaming. The National Lottery and Bingo may remain unscathed.   

Proposed Tax Increases 

Gaming duty: from current 15-50% to 20-60% 

Retail bookmaking: from current 15% to 30% 

Remote gambling (online): from current 21% to 50% 

Gaming machines duty: from current 5-20% to 10-40% 

The IPPR Report states, “The duties we have left untouched (pools and bingo duties) are justified on being lower harm and higher value (e.g., employment numbers) parts of the gambling sector. 

"By contrast, we have proposed higher duties on general betting and remote gaming as higher harm products. We suggest this is the best application of the polluter principle and will create incentives for companies to focus on lower-harm products.”  

The new rates could be announced in the government’s upcoming budget on October 30th.  

A spokesperson for the Betting and Gaming Council said of the proposed rates, “Comparable markets abroad that have imposed draconian regulations and disproportionate tax regimes have seen a spike in illegal black-market gambling.”  

Lords Keen to Target ‘Higher Harm’ Gambling Products 

The gambling industry currently invests £1.5 billion annually in advertising, with 60% of its profits deriving from just 5% of gamblers, many of whom already face addiction risks. The report criticises the Gambling Act 2005 and the unchecked practices of some gambling operators, advocating for more stringent regulation to prioritise public welfare over industry profits. 

The Chair of the House of Lords Gambling Industry Committee, Lord Grade of Yarmouth, is a strong proponent of tackling ‘higher harm’ gambling products’. 

In a recent report, he said, 

“Addiction is a health problem that should be treated by the NHS and paid for by gambling industry profits. The government must impose a mandatory levy on the industry. The more harmful a gambling product is, the higher the levy the operator should pay. 

“Urgent action by the government is required. Lax regulation of the gambling industry must be replaced by a more robust and focussed regime that prioritises the welfare of gamblers ahead of industry profits. 

“Our report makes some 66 recommendations, which we believe will begin to address this huge problem.”