'It will derail racing' - industry sounds stark warning following report Treasury is considering gambling tax hike

A hike in gambling tax rates in this month's budget would cause serious harm to British racing's finances and risk "derailing" the sport, ministers have been warned.

The comments from racing and betting industry leaders came following a report in The Guardian which said Treasury officials are considering proposals from think tanks to increase gambling duties and raise up to £3 billion to help tackle the 'black hole' chancellor Rachel Reeves says has been found in the UK's finances.

One of the proposals, by the Institute for Public Policy Research, calls for general betting duty, charged on bookmakers' profits from sports betting, to be doubled to 30 per cent and for remote gaming duty to rise from 21 per cent to 50 per cent.

There are fears a significant rise would lead to higher margins on racing odds, worse value for punters and less income for the sport. That would come as a major blow for British racing following the financial impact already caused by affordability checks, which it is estimated could cost a further £250 million over the next five years. The BHA revealed last Tuesday that betting turnover on the sport is down 9.5 per cent this year.

There has been speculation chancellor Rachel Reeves will increase gambling taxes in the budgetCredit: Nicola Tree

BHA chief executive Julie Harrington said: "The budget this month will be the government's first clear declaration of how it intends to tackle the hole in the public finances. We will follow it closely.

"In light of the recent speculation about the possibility of increasing betting taxes we must make clear to the government the potential unintended consequences of any such action. In particular, the potential to cause serious harm to racing's revenue streams if gambling taxes were to be significantly increased.

"With the effects of the financial risk checks still to be fully felt, a substantial increase in betting taxes would not only damage racing's finances, it could also have a real and lasting impact on communities across Britain."

Comment:

• Tom Kerr: A high-regulation, high-tax environment would spell disaster for British racing  

Harrington pointed out that British racing directly and indirectly supports 85,000 jobs, often acting as the largest employer in many areas, providing career opportunities for young people and forming the heart of communities.

She also called for the government to revisit the issue of levy reform, work on which was suspended when this summer's general election was called.

Harrington said: "Any weakening of racing's finances would not only have a huge impact on the livelihoods of thousands of people, it would inevitably lead to our sport being diminished on the world stage. In turn, that will deprive the government of one of its greatest cultural assets and soft power levers.

"The DCMS [Department for Culture, Media and Sport] has already accepted the case made by racing for an increase in the amount the sport receives through the levy. Indeed, the previous government was in the process of drafting a written ministerial statement to set out a new deal for racing when the general election was called in May.

"We would urge the new government to revisit the levy review at the earliest opportunity, and give serious consideration to the prospects for the future of the country's second most-watched sport if it raises taxes significantly."

British racing is already reeling from affordability checksCredit: Edward Whitaker

Betting and Gaming Council (BGC) chief executive Grainne Hurst also highlighted the threat to racing from tax increases.

She said: "I want to be very clear with government, any further tax rises now will not only slam the brakes on growth for our sector, but it will threaten jobs and completely derail horseracing.

"Our industry is at a crossroads as we seek to implement the measures contained in the white paper, measures that will cost our sector over £1bn. We also can't ignore the new levy on research, prevention and treatment for problem gambling, which will raise £100m a year from bookmakers.

"After so many years of uncertainty, we need stability to deliver sustainable investment, not further change which threatens to undo that contribution. What is true for the BGC is also true for horseracing."

Hurst claimed that new taxes would provide a boost to the black market, which she described as "hoovering up disaffected customers with eyecatching offers but none of the protections that are in place in the regulated market". A recent study by consultants Frontier Economics, commissioned by the BGC, claimed more than £4bn is being staked with illegal operators in Britain each year.

Hurst added: "Customers have been hit hard for years, with increasing pressure on the cash people have available to spend on the hobbies they enjoy, once bills and taxes are paid. Now is not the time to ramp up that pressure.

"Betting and gaming remains a hugely popular pastime in this country, with around 22.5 million people having a flutter each month, and it is enjoyed safely by the overwhelming majority. Our members are a great British export and genuine global leaders, delivering enormous economic good in city centres, on high streets and in the growing online sector.

"We want to partner with government to see the right, proportionate regulations, and a stable tax regime, which doesn't hit customers, doesn't raise the attraction of illegal operators and doesn't derail the horseracing industry, but instead delivers on the government's growth agenda."

Shares in Flutter Entertainment, the parent company of Sky Bet, Paddy Power and Betfair, closed down 8.8 per cent in New York after The Guardian story was published on Friday evening.

Reeves will present her first budget to parliament on October 30.

Read these next:

Gambling operator share prices fall sharply following reports of potential tax hike 

A high-regulation, high-tax environment would spell disaster for British racing 

Pick up your copy of The Big Jump Off, packed with everything you need for the 2024-25 National Hunt season. Our 72-page supplement includes ante-post tips, pro punter insight, trainer and jockey analysis and much more. Grab your copy free in the Racing Post newspaper on Monday, October 21, also available via the Racing Post Digital Newspaper as part of Members' Club Ultimate, our unrivalled subscription package.