Calls are growing for Labour to target the “massively under-taxed” betting sector as Paddy Power, one of the industry’s biggest players, revealed bumper results
The owner of Paddy Power has hiked an expected profit haul – days after Gordon Brown called for new taxes on gambling giants to tackle a child poverty crisis.
Industry giant Flutter is world’s largest online sports betting company with the stock market value of £30billion. It also owns Betfair, Pokerstars and Skybet.
After toasting an “excellent” three months to the end of June, the company predicted annual profits would surge by around 40% to £2.45billion. The vast bulk of its money comes from overseas but latest results showed it raked in almost £700million of revenues in the UK and Ireland between April and June alone, though broadly flat year-on-year.
It comes after a state pension warning for millions of Brits who are between two specific ages.
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Flutter’s bumper results were published as Chancellor Rachel Reeves on Thursday refused to rule out higher tax on betting firms. It followed former Labour PM Mr Brown’s intervention when he urged Ms Reeves to use the levy to raise £3.2billion to tackle child poverty, which he warned was blighting the lives of 4.5 million kids in the UK. That came on the back of a report from the Institute for Public Policy Research (IPPR)
Writing in the Mirror, Mr Brown said “with the public finances tight and children hungry, there is an obvious fix: use the massively under-taxed profits of the gambling industry to lift 500,000 children out of poverty.” He said taxing betting firm more could be used to scrap the controversial Tory-era two-child benefit limit. “We can apply this levy without touching bingo, or any lotteries, or horse racing,” he insisted.
Ms Reeves said: “I talk to Gordon regularly and saw him last week. Like him I am deeply concerned about the levels of child poverty. We’ve already launched a review into gambling taxes. We’re taking evidence and we’ll set out our policies in the normal way, in our Budget later this year.”
Flutter’s latest results come as the firm has seen its stock market value hit £30billion, and its share price at a near record high. Peter Jackson, its chief executive, saw his pay and perks package balloon to nearly £16million last year.
Flutter has moved its primary stock market listing to the US and its headquarters to New York.
While a big chunk of its business is now in the fast-growing US markets, the company saw profits in the UK and Ireland soar by more than a fifth to £831million in 2024, with its profit margin hitting 31% Its empire includes more than 350 Paddy Power shops in the UK, and 5,700 employees in this country.
In the UK, betting and gaming duties are levied on either firms’ gross profits or total stakes across several different gambling regimes. The Office for Budget Responsibility forecast they would bring in £3.8billion for the Treasury this financial year.
Mr Jackson hit back at calls for new taxes, saying: “Flutter is already one of the largest taxpayers in the UK, paying nearly £750million in taxes in 2024. Raising taxes is not straightforward and we have operational experience around the world whereby if you continue to push tax rates up, you see a reduction in the tax take. This is the case in the Netherlands, for example, where the government is facing a €200m (£173million) shortfall.
“The other very obvious risk is that consumers will move to the black market, and it is a real threat. From our perspective, it’s important that we keep customers in the regulated market, where there is significant investment in safer gambling and player protection.”
Dan Neidle, a tax lawyer and the founder of Tax Policy Associates, said he was “torn” on increasing gambling duties.
Writing on his website, he questioned whether the overhaul would raise anything like the amounts suggested by the IPPR. He went on: “This is always the problem with ‘sin taxes’. We can use them to raise revenue. We can use them to deter the ‘sin. But we need to be clear what we’re trying to achieve. And we need to be honest and admit that most of the tax is realistically paid by the sinners, not the companies selling the sin.”