Potential online gambling tax hike 'threatens to blow up funding of racing'

The government "is basically threatening to blow up the funding of horseracing", one gambling industry source warned on Thursday, as the sport was confronted with a bombshell in the shape of a potential hike in online gambling tax rates.

Although chancellor of the exchequer Jeremy Hunt's autumn statement to the House of Commons on Wednesday did not include any references to gambling, the documents published alongside did contain potentially grave news for the industry.

Under a chapter titled Backing British Business (point 5.86), the document said the government "will consult shortly on proposals to bring remote gambling [meaning gambling offered over the internet, telephone, TV and radio] into a single tax, rather than taxing it through a three-tax structure".

General betting duty and pool betting duty are set at 15 per cent of an operator's profits, but remote gaming duty, levied on games of chance such as online casino, is set at 21 per cent.

Senior figures in racing are understood to be worried about the implications for the sport of an increase in the rate of betting duty to bring it in line with remote gaming duty.

The Office for Budget Responsibility estimates that all gambling duties, online and land-based, will yield just short of £3.5 billion in 2023-24.

Analysts at Regulus Partners have estimated that increasing general betting duty for online to 21 per cent could benefit the Treasury to the sum of £150 million to £200m per annum.

However, increased taxation is likely to lead to higher margins on racing, fewer offers for punters and less money being available to sponsor and promote the sport.

• Comment: The government's tax change proposal is yet another blow to racing

There was a reluctance from people in racing and bookmakers to comment on the possibility of a rise in duty as they waited for more details from the Treasury.

The gambling industry is already facing huge financial impact from proposals such as affordability checks contained within the government's gambling white paper published in April.

However, one senior industry figure told the Racing Post: "A huge tax hike on sports betting coming on the back of affordability checks and everything else means the government is basically threatening to blow up the funding of horseracing. This is existential for horseracing."

"This is existential for horseracing"Credit: Edward Whitaker

The government has brought forward plans to review the levy to help make up for the loss of revenue racing already expects to suffer from affordability checks.

Ministers at the Department for Culture, Media and Sport hope that racing and bookmakers can come up with an agreement on the levy between them which prevents the government from having to step in.

There are concerns that the possible gambling duty rise may hit the levy process too.

Regulus said that general tax increases and the levy should be seen as separate but added: "Betting operators are nevertheless likely to claim cost uncertainty as a difficulty in reaching a settlement."

The news comes as both the racing industry and bookmakers wait for the Gambling Commission to announce its next steps following its recent consultation into affordability checks.

It has been estimated that the proposals could cost British racing £250m over five years.

The commission's chief executive Andrew Rhodes, speaking at the annual convention of amusements and gaming machine trade body Bacta this week, said: "We are making strong progress in working through the around 2,400 completed consultation responses and we hope to be ready to report back early next year."

The autumn statement had further bad news for another sector of the gambling industry, that of land-based casinos.

Gaming duty bands applied to UK casinos have been frozen and will not rise with inflation, which the Betting and Gaming Council claimed would effectively create a £5m annual tax increase across the sector.

Punters and the racing industry are being called on to sign a petition calling on the government to stop the implementation of affordability checks. You can sign the petition here.

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The government's tax change proposal is yet another blow to racing 

Autumn statement raises prospect of increase in duties on remote gambling with consultation set to launch 

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