Flutter CEO: Sharp gambling tax hike “in no one’s interest”

As speculation mounts over potential tax hikes, the UK gambling industry grapples with fears over the damaging consequences of a jump in gambling duties.

“In no one’s interest,” “damaging and self-defeating,” but also “pretty unlikely.” These are some of the mixed reactions to the news that the UK Treasury is considering proposals to raise gambling taxes.

Five days after the speculation first emerged, the industry is still on edge. 

Shares in UK-facing gambling companies have taken a significant hit as investors brace for potential changes. 

Between Friday (11 October) and yesterday evening (15 October), Entain’s stock plummeted by 12.4%, evoke shed 15.3%, and Flutter lost 7%.

Analysts suggest recovery may be slow, despite expectations that any eventual tax rise might be lower than feared.

At the heart of the industry’s concerns is the fear that such a sharp tax increase could stifle competition, reduce consumer choice, and paradoxically lower tax revenues. Some even predict a mass exodus of online casino operators.

Effects on competition

The Guardian reported on Friday that the UK Treasury is considering a plan to raise up to an extra £3bn annually through increased gambling duties. 

Among the proposed measures is a suggestion from the Institute for Public Policy Research (IPPR) to double the general betting duty from 15% to 30%, and hike the remote gaming duty for online operators from 21% to 50%.

The Betting and Gaming Council (BGC) was among the first to push back against the proposals, stating that they are based on “fantasy economics” and are not credible.

Yesterday, Flutter Entertainment CEO Peter Jackson (pictured) emphasised in a LinkedIn post that “setting too high a tax rate reduces competition, weakens the consumer offering, and can lead to a reduction in tax revenue. This is in no one’s interest.”

Jackson highlighted the importance of tax consistency for long-term investment. 

“We at Flutter support the current implementation of the Gambling Act Review, which requires ongoing collaboration on a number of key areas, but the fact that it was complicated by three years of delay caused great uncertainty for the UK’s sports betting and gaming industry. 
 
“Consistency around fiscal policy is also paramount as it allows businesses like ours to invest with more confidence,” he said. 

Profit wipe-out

Elsewhere, analysts at Regulus Partners highlighted that UK is not alone in facing potential gambling tax hikes. 

Sweden increased its GGR tax rate to 22% this year, and the Netherlands plans an increase to 37.8% over the next two years. 

Analysts at Regulus Partners estimate the UK gambling industry already contributes around £3.4bn annually in taxes, giving a blended rate of 23%.

While the sector might tolerate a modest increase, Regulus warned that anything more substantial could be damaging. 

The firm argued that a sharp rise in online gambling taxes would drive players to unregulated markets, further reducing taxable income and increasing the risk of problem gambling.

“At a blended rate of c. 40% tax on Britain’s gambling sector, a number of things will happen. First, because Britain taxes GGR rather than net revenue, bonuses would have to be cut, fuelling a growing differential between black market offers and licensed product – channeling will almost certainly reduce. 

“Second, profits would be largely or entirely wiped out: UK-related operating margins would need to be higher than 20% to stop the tax increase causing operating losses,” the analysts said. 

The firm concluded that anything more than a small tweak to tax rules “would be damaging and self-defeating.”

Large hike seen as unlikely

Other experts, such as Alun Bowden from Eilers & Krejcik Gaming, find the high-tax proposals both surprising and unlikely to pass.

“I’ve been saying for a long time that a rise in online gambling tax rates feels inevitable,” Bowden commented on LinkedIn.

“We may see them nudged up a bit, either in this budget or the next,” he added.

However, he believes the Guardian article overstated the likelihood of such a significant tax increase:

“To be clear, the article essentially says, ‘someone at a think tank proposed an incredibly high tax level for online casinos and had a meeting with the Treasury where they nodded and said, hmm, interesting, we’ll consider this.’”

While Bowden acknowledges that a slight tax increase may be inevitable, he warns that the government must carefully consider the broader consequences.

“This sort of move will have fairly large knock-on effects,” he added. 

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