Treasury did not consult DCMS on 'hammer blow' tax move - BGC

British racing faces another "hammer blow" to its finances in the form of a potential increase in online gambling tax rates, the Betting and Gaming Council (BGC) has warned. 

The industry body has urged chancellor of the exchequer Jeremy Hunt not to use a proposed simplification of gambling tax as a “ Trojan Horse” to further raise taxes on bookmakers. It also suggested the Treasury had not consulted the Department for Culture, Media and Sport over the move.

In Wednesday's Autumn Statement,  the government caused surprise when it said it would consult on proposals to bring remote betting into a single tax, replacing the current three-tax structure. General betting duty and pool betting duty are currently set at 15 per cent of an operator's profits, while remote gaming duty, levied on games of chance such as online casino, is set at 21 per cent.

That has raised the alarming prospect of betting duty being increased and brought in line with remote gaming duty, which could lead to higher margins on racing, fewer offers for punters and less money being available for bookmakers to sponsor and promote the sport. 

"Any further tax rises could be a hammer blow for racing's finances, which are already threatened thanks to measures proposed by the government in the recent white paper," said BGC chief executive Michael Dugher. "It relies heavily on betting operators for its success and yet the government appears determined to draft in measures which shrink the industry with huge ramifications for other sectors.

“What’s worse, the Treasury didn’t bother to consult or even inform the Department for Culture, Media and Sport, which is responsible for betting and racing. It seems they are high on tax but low on joined-up government. There are genuine fears that any so-called simplification of the current tax structure will be nothing more than a Trojan Horse to further raise taxes on businesses."

Michael Dugher: chief executive of the Betting and Gaming Council (BGC)

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. Members of the BGC are understood to have met with the Treasury on Friday. 

"This has the potential to risk jobs and investment, and undermine the competitiveness of British racing on the global stage, placing its rich history and heritage in peril," added Dugher. "We were promised an Autumn Statement that would deliver growth – the only thing growing is the list of worries for the betting and racing industries."

That view was echoed by one senior betting industry figure, who described the potential changes as an "unwelcome distraction at a time of rising risks for the racing and bookmaker industries". 

"This latest potential tax grab comes alongside the existing work to implement the findings of the gambling white paper, ongoing discussions around reform of the levy, the implementation of a new tax in the form of the RET levy [aimed at raising additional funds for research, education and treatment for gambling harms], and against a backdrop of economic pressure," they said. "Risks to the racing industry have never been higher and this new initiative could be a further hit to its long-term health."

Andrew Black, the co-founder of Betfair who also owns the Chasemore Farm breeding operation, said a new tax structure could further blur the lines between betting on racing and other forms of gambling.

Andrew Black: "If we're treated in the same way as other forms of gambling, it is more worrying than it sounds"Credit: Edward Whitaker

"My fear is that if racing is just another betting product, given it has a completely different cost base to other forms of gambling, then it's basically doomed," he said. "Racing exists in a unique cultural place and must be differentiated from other forms of betting in order to survive. I find the attitude of the government and regulators to be frustrating and lacking in empathy towards the sport. 

"If we're treated in the same way as other forms of gambling, it is more worrying than it sounds because operators will start to strategize away from racing if that's the optimum way forward for their businesses. Racing has to be differentiated and treated differently, and if we don't get that then you almost think the writing is on the wall. It's a pretty scary scenario as I see it."

Alongside potential changes to betting duty, the gambling and racing industries are already facing the huge financial impact from proposals such as affordability checks. A petition calling for a halt to the intrusive measures passed 97,000 signatures on Monday afternoon and will be considered for debate in parliament once it reaches 100,000.

Read more:

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

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

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