BGC: Increased gambling tax would bolster the dangerous black market

Fears of a tax increase on online gambling in the UK loom while a new YouGov survey suggests that 65% of bettors agree that such change “would make customers turn to unregulated betting sites”.

The research was commissioned by the Betting and Gaming Council (BGC), the trade and standards body for UK betting, which warns that this shift could not only fail to generate more tax revenue but also jeopardise player safety.

Furthermore, the BGC is also concerned that increased taxation would severely impact the financial health of sports, particularly horseracing, which currently receives significant funding from its members. 

Undermining the regulated gambling market 

UK gambling is a highly regulated sector, servicing 14 million adults (excluding the National Lottery) who gamble per month and generating £10.9bn in annual gross gambling yield (GGY).

Licensing duties see consumers protected by safer gambling rules, compliance monitoring, customer care interventions, responsible gambling tools, controls, and financial probity – UKGC.

With the government now consulting on a major change to the way betting and gaming is taxed online, fears of a price increase for betting on sports like racing and football are only on the rise.

Sporting betting and online gaming is currently taxed at different rates, but last month HM Treasury launched a new consultation which proposed a single new tax.

Describing the stats as “shocking”, BGC CEO Grainne Hurst said that these figures prove what’s at stake if the government forces through a self-defeating tax hike on ordinary punters.

“It’s clear it will not raise more tax, it simply risks forcing huge numbers of customers out of the regulated market, with its world leading standards on player safety, into the arms of the growing, illegal, unregulated and unsafe gambling black market online,” she said.

“Any tax rises would make a mockery of the Government’s growth strategy and be catastrophic for horseracing, which is already facing a bleak financial outlook.”

A wake up call

The study revealed that only 23% of punters believe a tax hike is unlikely to have an impact on customers moving towards the black market.

It is also worth noting that the argument around the potential impact of the black market is a long-running one – and one which politicians have not always been very receptive to. 

Hurst continued: “This is a wake up call for the government, punters have been loud and clear, hit them with further taxes and they will walk away from sports like racing, straight to the black market, triggering a spiral of decline.”

The survey posed a scenario to customers: “Imagine that betting on sports events like horseracing became more expensive because the government increased the amount of tax that betting companies have to pay. How likely or unlikely do you think it is, if at all, that this would make customers turn to unregulated betting sites that don’t have to pay any tax at all?”

As stated above, the BGC’s main concerns are about the black market. It was only at the end of last year that the Council warned the government that unregulated black market gambling poses greater risks than perceived by British consumers.

This followed a study published by microeconomics consultancy Frontier Economics and was described as “the first major study on the black market since the publication of the previous Government’s White Paper on gambling reforms”.

The coverage and ease of promotion of illegal websites were detailed as an area of concern, as 15% (2.8 million people) of gamblers who responded to the survey said they had heard of at least one of the black market sites listed.

The BGC also revealed that 1.5 million Brits stake up to £4.3bn on the growing gambling black market annually.

The organisation concluded: “This growing, unsafe, illegal gambling black market does not contribute to sport, does not pay tax and targets customers who are vulnerable to harm, including the self-excluded.”