Betting bosses claim a tax hike on the industry will only drive punters into the arms of black market operators and deprive the Treasury of money
The co-founder of Paddy Power has accused industry chiefs of scaremongering after they warned new gambling taxes could push punters towards the black market.
Stewart Kenny, who resigned from the bookmaking giant in 2016 and has since become a vocal critic of the sector over problem gambling, claimed it was a red herring. He admitted using the “black market” argument during his time in charge, adding: “I’m embarrassed to admit this…we knew it was way exaggerated but it is the perfect way of saying ‘the government will lose money’ – but in fact it won’t.”
Among those issuing the black market warning is Paddy Paddy’s now owner.
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His comments came as top bosses launched a fightback in the wake of calls for Chancellor Rachel Reeves to hike gambling taxes to fund welfare spending and tackle harmful gambling. It follows another round of bumper results from some of the industry’s big players who, together, are forecast to rake in profits of £4billion globally this year.
Peter Jackson, chief executive of Paddy Power parent company Flutter, which recently predicted annual profits would surge by around 40% to £2.45billion, told the Financial Times “it’s really important (to) keep customers in the legitimate market where we can make sure we can look after them”.
Sean Wilkins, finance chief at William Hill owner Evoke, which analysts estimate will make £362million this year, said higher taxes will “only lead to a growth in the black market.” And Stella David, chief executive of Ladbrokes owner Entain, warned of “the law of unintended consequences”.
Pressure is growing for the government to use a consultation on updating the tax treatment of bookmakers to hit the sector with fresh levies. The Office for Budget Responsibility has forecast current levies will bring in £3.8billion for the Treasury this financial year.
Former Labour PM Mr Brown recently he urged Ms Reeves to use higher taxes to raise £3.2billion to tackle child poverty, which he warned was blighting the lives of 4.5 million kids in the UK. It 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.
Mr Jackson has 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.”
Meanwhile, British horse racing will go on strike on September 10 in protest over another tax issue. The sport is taking the unprecedented action of refusing to race to campaign against the Treasury’s proposal to introduce a single remote gambling tax, which would increase the 15% tax rate paid by bookmakers on racing and aligning it with online gaming, which is currently taxed at 21%.