Tax online betting games to reflect the harm they cause, UK MPs say

By Josie Clarke, PA Consumer Affairs Correspondent, and Chronicle staff

The UK Government should not “cave in to industry scaremongering” and tax online betting games at a rate that reflects their harm, MPs have said, in a report met with disappointment in Gibraltar.

Online betting can lead to harmful, addictive, high frequency gambling that brings no benefits to people, families and communities, the Treasury Committee said.

It urged the UK Government to “more sharply recognise that different types of gambling inflict different levels of harm”, and said this should be reflected in its approach to taxation.

The committee’s report said there was “another side to the industry” from the various forms of gambling, ranging from seaside arcades and bingo through to betting on the races and football, safely enjoyed by many people.

The shift towards online betting games has picked up pace in recent years, with the proportion of the “gross gambling yield” associated with remote gaming rising from 12% in 2014 to 44% in 2024.

The committee, which called for evidence on the taxation of gambling as part of a series of sessions looking at decisions facing the Chancellor in her 2025 Budget, said it rejected the industry’s assertion that gambling caused no social ills.

It also heard evidence which it said both supported and challenged the gambling industry’s concern that increased taxation could drive more customers to the black market.

The committee said it recommended that the Government should examine how to tackle any black market gambling and consider whether additional anti-avoidance measures were needed.

Treasury Select Committee chairwoman Dame Meg Hillier said: “Whether at a local racetrack or a seaside arcade, for many people, gambling is a fun pastime enjoyed with family and friends.”

“But, we heard that the industry is hiding its more insidious parts behind the friendly facade of its traditional, cultural forms.”

“For too many people, the highly addictive and harmful nature of online betting games has seriously impacted their lives and the lives of those around them.”

“The impacts of problem gambling in our communities are plain to see, and the industry’s boldfaced claim to our inquiry that it does no social harm is staggering.”

“Online betting games are extracting huge amounts of money from people who have been funnelled into the most addictive, harmful corners of the industry via their love of sports, or the occasional game of bingo.”

“We are urging the Government not to cave in to industry scaremongering and to tax online betting games at a rate that reflects the level of harm they inflict.”

The debate is being closely monitored from Gibraltar amid concern that any increase in remote gaming taxes could have an adverse knock-on impact on companies licensed in Gibraltar with UK-facing.

Any impact on those businesses, which already contribute over £750m to the UK exchequer, could in turn hit tax revenues in Gibraltar, where gaming companies accounted for 30% of the Rock’s GDP, 3400 jobs and around 50% of total corporate tax receipts for last year.

Nigel Feetham, the Minister for Justice, Trade and Industry, has in recent weeks met with senior UK figures including Dan Tomlinson, Exchequer Secretary to the Treasury, to ensure Gibraltar’s position is properly understood ahead of any decision.

“The Treasury Select Committee’s recommendations are disappointing, though not entirely surprising given the tone of the hearing,” Mr Feetham told the Chronicle.

“The Committee’s brief report reinforces the impression of its stance towards the gaming sector and appears to recommend a higher level of taxation than even the industry is anticipating.”

“We will redouble our efforts and continue to focus on addressing the substantive issues we have already highlighted.”

During the evidence hearing late last month, the Treasury committee heard evidence from Stephen Hodgson, the chair of the tax committee at the Betting and Gaming Council, who explained how Gibraltar’s gaming sector had evolved over the years to become “an international centre of excellence”.

He addressed too concerns about Gibraltar’s lower level of corporation tax.

“What we tend to find, because the UK has been a global success story in terms of betting and gaming, is that we have lots of businesses headquartered in the UK paying UK corporation tax, but also having operations in a number of other jurisdictions like Gibraltar, where they will pay local corporation tax in those places,” he said at the time.

“But what you'll also find is that because these businesses, these subsidiaries in other jurisdictions, tend to be part of a bigger global group, there will also be intercompany activity which results in more corporation tax being paid in the UK because they're part of a multinational family.”

Those points were reflected in the committee’s report, as were concerns higher taxes risked driving players to unregulated sites.

Reacting to the Treasury committee’s report this week, Betting and Gaming Council chief executive Grainne Hurst said: “Further tax increases on the regulated online sector risk undermining consumer protections by pushing players towards the unsafe, unregulated black market – while reducing Treasury revenues and cutting the vital funding our members provide to British sport, including horseracing, football, rugby league, darts and snooker.”

“We have always recognised that betting and gaming can lead to harm for a small minority, which is why our members are investing more than ever in safer gambling – including new stake limits on online gaming, enhanced affordability checks, swift data-driven interventions, robust advertising safeguards, and funding for a new £100 million statutory levy for research, prevention, and treatment to tackle problem gambling and related harm.”

Ms Hurst added: “BGC members contribute £6.8 billion to the economy, generate £4 billion in tax, and support 109,000 jobs, while facing an effective tax rate of up to 80% when duties are combined with corporation tax, business rates, national insurance, VAT, and the new statutory and economic crime levies.”

“Much is at stake in the Chancellor’s Budget. Get it wrong, and it’s not just jobs and growth that will suffer, it’s safer gambling itself. To protect consumers and support a safer, stronger industry, we must keep gamblers playing within the regulated market.”