BGC warns UK tax hike could push two thirds of players into black market

Two thirds of bettors surveyed by YouGov in Great Britain have said a proposed increase in online betting tax rates would drive them to play with unlicensed operators.

The YouGov survey found the majority of respondents had concerns over the impact of higher taxes. Some 65% of players agreed increased rates “would make customers turn to unregulated betting sites” that do not pay tax, if costs were passed on to the consumer.

In April, the treasury announced a tax consultation, proposing replacing three online betting tax rates with a single rate. This consultation launched on 6 May and is due to close on 21 July.

Current rates comprise Remote Gaming Duty (RGD), General Betting Duty (GBD) and Pool Betting Duty (PBD). Remote activities are hit by RGD at 21% of operator profit, while GBD is taxed at 15% of profit and PBD at 15% of net stake receipts.

It is not yet clear what rate the government will set for the so-called Betting & Gaming Duty (BGD), but the sector has expressed concerns the betting tax rate could be increased in line with remote gaming duty as all three rates are consolidated.

Can operators absorb impact of increased tax rate?

Commenting on the issue, Melanie Ellis, partner at Northridge Law, told iGB that although some operators could absorb the impact of a few percent on tax rates, many are already operating on tight margins.

“Particularly, smaller and newer brands who are trying to grow their market share” will be affected, she said.

“The BGC is concerned that bookmakers will be forced to offer less favourable odds to retain a profit margin, but it may be that a tax increase simply leads to a contraction of the market, with only those able to absorb the tax increase remaining in business,” she added.

“This in itself is likely to drive customers to the black market, and unfortunately, it’s those that are most vulnerable who will be most affected.”

BGC previous warned against increased tax on gambling

The BGC has already issued several warnings about the impact of the mooted changes to tax rates. According to the standards body, it could threaten markets such as horse racing.

“This shocking statistic proves what’s at stake if the government forces through a self-defeating tax hike on ordinary punters,” BGC CEO Grainne Hurst said of the YouGov survey findings.

“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.”

BGC: Survey a ‘wake-up call’ for government

Hurst said any tax increase would make a “mockery” of the government’s growth strategy. Labour has been back in power for almost one year having won the 2024 general election by a landslide.

“This is a wake-up call for government,” Hurst said. “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.”

On this, the BGC highlighted its own recent study on the state of the black market in Britain. This found British players currently wager up to £2.7 billion online via black market operators.

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