'This is in no one's interest' - gambling giant warns of unintended consequences of tax hike

Gambling giant Flutter Entertainment has added its weight to warnings of the damage likely to be caused by dramatic rate rises on bookmakers amid news that the government could target £40 billion in spending cuts and tax hikes rather than the widely quoted figure of £22bn.

Peter Jackson, chief executive of Flutter, expressed a concern at the unintended consequences that could result from the imposition of higher taxes following reports the Treasury was considering proposals put forward by two think tanks to dramatically increase gambling duty rates in the budget on October 30.

One of the proposals, by the Institute for Public Policy Research, calls for general betting duty, charged on bookmakers' profits from betting on racing and other sports, to be doubled to 30 per cent and for remote gaming duty to rise from 21 per cent to 50 per cent. BHA chief executive Julie Harrington claimed such a significant rise in gambling taxes had the "potential to cause serious harm to racing's revenue streams".

Those backing tax rises point to other jurisdictions such as the state of New York in the US where Flutter's American arm FanDuel is subject to a 51 per cent sports betting tax rate.

Flutter Entertainment has warned about high gambling taxes in both the US and UK

However, Jackson was quoted in the Financial Times saying that pushing taxes too high would send people to the black market, lowering tax revenues, while customers would also receive a worse offer.

In a subsequent post on LinkedIn, Jackson said: "With plenty of speculation around the taxation of our sector this week, it was perhaps timely that I warned of the unintended consequences of high taxes in an interview with the Financial Times published today. 

"While my comments about balance were in relation to the US, the point can also be applied to the UK operating environment and elsewhere – 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."

Treasury officials have said they do not comment on speculation around tax changes "outside of fiscal events". However, chancellor of the exchequer Rachel Reeves did appear to back the gambling sector at this week's investment summit.

Reeves, who is an MP in Leeds where Flutter's Sky Betting & Gaming opened a £15 million UK technology and innovation hub three years ago, was quoted by The Sun as saying she was "proud" that the sector's big players were based in the UK.

Rachel Reeves welcomed Sky Bet's job and wealth creation in LeedsCredit: Nicola Tree (Getty Images)

She added: "I'm an MP in Leeds. Sky Bet are based in Leeds. We welcome that job creation and wealth creation in Leeds, good jobs, paying decent wages. We want a competitive tax system in all parts of our economy."

A further report emerged in the Financial Times on Tuesday suggesting £40bn was the new target for Reeves. The figure was put forward as that needed to protect key government departments from real-terms spending cuts as well as building a buffer for the remainder of parliament.

Further details of the proposals for fiscal changes made by the Social Market Foundation emerged on Tuesday. The report recommends that remote gaming duty, levied on online games of chance, be doubled to 42 per cent in this year's budget.

However, while the report calls for a review of all gambling taxation to be carried out by the 2025 budget, it does recommend that racing be treated differently to remote gaming.

It said: "We understand that some sectors, such as horseracing, face particular challenges in the context of levies and media rights, and that there are legitimate arguments to ease the tax burden on struggling sectors."

Shares in Flutter fell by eight per cent on the New York Stock Exchange on Friday after speculation about the budget first emerged and was followed by further falls in London on Monday for Flutter, Ladbrokes and Coral's owner Entain and Evoke, the parent company of William Hill.

The share price of all three fell again in London on Tuesday, with Entain down 3.46 per cent, Evoke 1.44 per cent and Flutter 0.46 per cent at the close of trading.

Read these next:

'A reckless thing to do' - proposal to double betting duty would have devastating effect says leading industry analyst 

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

Flutter is sweeping all before it - and racing must realise its attention is increasingly focused elsewhere 

The Front Runner is our unmissable email newsletter available exclusively to Members' Club Ultimate subscribers. Chris Cook, the reigning Racing Writer of the Year, provides his take on the day's biggest stories and tips for the upcoming racing every morning from Monday to Friday. Not a Members' Club Ultimate subscriber? Click here