The chancellor should ignore “scaremongering” by gambling firms and raise taxes on the £11bn sector’s most harmful products, MPs on the influential Treasury select committee have said.
In a scathing report, delivered as Rachel Reeves’s Treasury team is finalising her second budget as chancellor, MPs accused the sector of hiding its more “insidious” products behind traditional activities such as horse racing and seaside arcades.
They urged Reeves to impose higher duties on the most addictive products, such as high-street slot machines and online casino games, both of which are growing rapidly.
Support for tapping these segments of the industry for much-needed revenue echoes similar calls from thinktanks and Gordon Brown, who has said gambling taxes should rise by £3bn to fund an end to the two-child benefit limit.
Gambling firms have fought tooth and nail against any increase, including through a summer charm offensive with Labour MPs. But privately, industry figures believe the chancellor is likely to opt for a more moderate increase, aimed at raising between £1bn and £1.5bn.
As well as recommending duty increases, the committee also took aim at the industry’s chief lobbyist for a “staggering” claim that gambling firms do not cause harm.
In what the committee chair, Meg Hillier, called an “extraordinary moment” during an evidence session last week, the Betting & Gaming Council’s (BGC) chief executive, Grainne Hurst, repeatedly denied that gambling was linked to social ills.
“You feel a moment in a room sometimes where everyone’s jaw drops,” said Hillier. “A couple of us pushed to ask if she was sure she was saying that. But she doubled down.”
In a relatively short report, published just over a week after Hurst’s testimony, the committee explicitly linked tax rates to addiction, urging the chancellor to reflect gambling products’ differing risks in tax policy.
At present, multiple rates of duty are applied to different products.
Bets on horse racing and other sports such as football come under general betting duty, levied at 15%, the same rate as for pool betting. Casinos pay gaming duty of between 15% and 50%.
Remote gaming duty is levied at 21%, while machine gaming duty, governing high-street slots, is set at 20% for the most popular type of machines.
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The Treasury has been considering harmonising the different duties. But the select committee joined two thinktanks, the SMF and IPPR, in calling on the chancellor to reject this approach.
The BGC has said that raising taxes on the sector, which took £11bn from gamblers last year, would force firms to pass on the cost in the form of less favourable odds, driving gamblers to the unregulated market.
In its report, the committee pointed to evidence submitted by the SMF, casting doubt on whether higher duty rates are associated with greater use of the hidden market internationally.
The BGC has also pointed to a report by the accounting firm EY, which it commissioned, saying 40,000 jobs could be lost in the sector if taxes rise too sharply, warning of a £3.1bn hit to the economy. Betfred, run by the former Tory donor Fred Done, has threatened to close all of its 1,287 shops.
A BGC spokesperson said a tax raid on the sector would end up “reducing Treasury revenues and cutting the vital funding our members provide to British sport, including horseracing, football, rugby league, darts, and snooker”.
