UK pushes ahead with online gambling tax change despite concerns, including over Gib

Changes to UK online gambling duty were passed unopposed in the Housing of Commons on Tuesday evening, despite concerns about the impact they could have on Gibraltar’s economy and the risk of pushing people to unlicensed markets.

The package of gambling tax changes announced in the UK Budget late last year will raise about £1 billion for the UK public purse.

But the Gibraltar Government has warned they will have a disproportionate knock-on impact on Gibraltar, where betting and gaming businesses make a vital contribution to the Rock’s economy, accounting for 30% of GDP and employing some 3,500 people, over 10% of the total workforce.

Those concerns were reflected during a debate on the committee stage of the Finance Bill in the Commons, during which Labour MP Gareth Snell acknowledged that the decisions taken by MPs would “have an effect” on Gibraltar.

He pressed Lucy Rigby, the Economic Secretary to the Treasury, to explain how the UK Government would address the issue.

“Nigel Feetham, the Minister for Justice, Trade and Industry in Gibraltar, has repeatedly pointed out that 3,500 people in Gibraltar derive their job from the gambling sector,” Mr Snell said.

“It makes up 30% of GDP there [and] one third of Gibraltar’s tax receipts comes from the gambling sector.”

“He has said only this week that the change will remove tens of millions of pounds from the Government of Gibraltar’s budget.”

“There is absolutely no way they can replace that from domestic sources in any reasonable time.”

“Given that Gibraltar is one of our important overseas territories, will the Minister set out and explain what conversations the Treasury has had with counterparts in Gibraltar?”

“What are the contingencies if we find ourselves inadvertently creating a massive black hole in the budget of the Government of Gibraltar?”

“Again, if we have to bail them out in some way, where will that money come from?”

“If it is taken out of the revenue that is expected to be raised from this particular rate, that then undermines the figures in other parts of the Budget, which, in its entirety, I support.”

Responding, Ms Rigby repeated earlier UK Government statements that the impact on Gibraltar and the wider gaming industry would be monitored.

“Of course we recognise that Gibraltar has a gambling industry that very much faces the UK,” she said.

“I can assure him that there has been engagement, not by me, but by some of my colleagues in the Treasury, with Gibraltar to that end.”

The exchanges in the Commons were being closely monitored in Gibraltar, including by Mr Feetham who is assessing the potential impact on the public purse after the changes come into effect in April, and how that might be mitigated.

Mr Feetham welcomed the fact that MPs had reflected during the debate concerns he had been setting out for months regarding the impact on Gibraltar and the risk of pushing punters to unregulated markets.

“Nevertheless, the UK is clearly pressing ahead with the tax from 1 April,” he told the Chronicle.

The Finance Bill has two more stages left in the Commons and will also be discussed in the House of Lords.

‘BLACK MARKET’

The UK Government believes the increases to gambling taxes will discourage the most harmful forms of betting, despite warnings it could push people into the “black market” and lead to unemployment.

On Tuesday, Ms Rigby said the hike of remote gaming duty, which will affect online slots and roulette, from 21% to 40% would lead to less people getting hooked.

Online sports bets will be subject to rates of 25%.

Ms Rigby told MPs over 40% of gamblers using online slots, bingo or casino games are at risk of “gambling-related harms”.

She said: “The tax changes that we’re making as part of this Bill disincentivise the most harmful forms of gambling.”

She added: “This Bill implements a targeted package of rate changes that will raise over £1 billion a year. It focuses increases on remote gambling, which has grown significantly.”

“It protects UK horse racing, and it supports lower-risk community-based activities by abolishing bingo duty.”

However MPs raised concerns about the impact on employment, and on whether it would lead to gamblers turning to unlicensed gambling.

Mr Snell, whose constituency is home to online bookmaker Bet365, feared his constituents could lose their jobs.

“The consequence is going to be felt in my constituency with job losses,” he said.

“It is going to be felt with the fact that there are people who will not have a job this time next year as a result of the company that they work for, will either have to reduce the number of people that they have working for or move overseas.”

In an intervention Conservative former minister Sir Gavin Williamson added: “In Staffordshire and in Stoke-on-Trent Central specifically 5,500 are employed by Bet365. This isn’t just a significant employer, it is the most significant employer.”

“I wonder what actions or interventions the Treasury is looking at taking to try and offset some of the potential job losses?”

Ms Rigby replied: “Employment is indeed an important consideration, and it is one that has been borne in mind for the purposes of this Bill. The engagement has been considerable, engagement on all of those issues.”

She later added that the OBR expects that employment will rise in every year of its forecast.

Conservative shadow Treasury minister James Wild said the increases would mean the UK would have among the highest taxes on gambling in the world.

The Tories attempted to put through an amendment that would mean Rachel Reeves would have to give a statement to the Commons six months after they had come into force on how they had affected employment and tax revenues.

It was defeated by 351 votes to 187, majority 164.

Mr Wild said: “It is questionable if these measures will actually lead to stable, long-term revenue gains for the exchequer.”

“There is a very real risk they result in job losses and greater use of unregulated operators in the black market.”

Conservative chair of the Culture, Media and Sport select committee Dame Caroline Dineage warned of the drift to unlicensed firms, as she warned it could see the online black market double in size.

Dame Caroline said: “If (Ms Reeves) is not careful on this occasion … more people could be dragged into the black market where they will quite simply find better offers than those offered by gambling companies, and the black market is completely unregulated, there is no maximum stake limit, there is no financial vulnerability checks, there are no deposit limits or prompts or transparent spending summaries.”

She added: “The black market is a wild west that any vulnerable person could be very easily drawn into, and these measures could represent a one-way ticket to that town.”

Ms Rigby said that the UK Gambling Commission will be given an additional £26 million over the next three years to “strengthen enforcement and protect consumers from dangerous illegal sites”.