In a significant move targeting the digital gambling sector, Chancellor Rachel Reeves has unveiled a substantial tax increase for online betting firms in her recent Budget. The decision, which follows intense lobbying from the industry, aims to address problem gambling while offering relief to traditional bingo halls.
The Tax Hike Details
The remote gaming duty will more than double, soaring from 21% to 40% starting in April next year. This tax is already a major revenue source for the Treasury, generating approximately £1 billion annually. According to the Office for Budget Responsibility, this sharp increase is projected to bring in an extra £1.1 billion per year by the 2029/30 financial period. Notably, the IPPR think tank had advocated for an even steeper rise to 50%.
Furthermore, the Chancellor revealed a second wave of taxation set for April 2027. A new general betting duty rate of 25% will be applied specifically to online gambling. However, in a protective measure for the horse racing industry, remote bets placed on horses will be excluded from this new 25% remote betting rate.
Winners and Losers in the Gambling Shake-up
While the online sector faces a heavier tax burden, the Budget delivered positive news for land-based venues. The 10% duty applied to bingo halls will be completely scrapped, providing a financial boost to these community-focused establishments. This move is designed to support the wider hospitality sector and help keep bingo venues on the high street.
The Treasury justified the measures by stating it was "raising taxes on online gambling – which has grown substantially over the years, alongside gambling harms – while protecting face-to-face gambling, from bingo halls to horse racing." It acknowledged that while many people enjoy online betting in moderation, for others it can cause significant harm.
Reactions and Forecasted Consequences
The decision was welcomed by figures such as Dame Meg Hillier, chair of the Treasury Select Committee, who stated: "The gambling sector’s scaremongering has failed. The Chancellor has made the right decision... that the tax rate for remote betting, including highly addictive casino games, should reflect the harm it inflicts." She contrasted the cultural contribution of racecourses and bingo halls with online slots, which can "quickly drain the bank balances of vulnerable people."
However, the OBR forecast suggests that the ultimate cost will likely fall on players. It predicts that operators will pass through around 90% of the duty increases through a combination of higher prices for bets and reduced payouts for winners.
Industry experts noted the divergent impact. Adam Rivers of Alvarez and Marsal commented that while painful for the online sector, land-based bingo operators have been given "some breathing space." The British Horseracing Authority also expressed relief, with acting chief executive Brant Dunshea welcoming the support for an industry that sustains 85,000 jobs.
The tax raid aligns with calls from former Labour Prime Minister Gordon Brown, who had urged the government to target the "massively undertaxed profits" of the industry, suggesting increased levies could help lift hundreds of thousands of children out of poverty.
