While the UK government faces fiscal challenges that could lead to higher betting and gaming taxes, Barclays analysts believe a major tax increase in November’s budget is less likely for several reasons.
In a research note published Friday, Barclays estimated that a 5% increase in gambling taxes (excluding Lottery and Bingo) would generate £600-700 million in additional tax revenue for the government, representing only 2-3% of the £26.5 billion fiscal consolidation required by FY29-30.
The current tax structure includes a 15% General Betting Duty for both retail and online betting, 21% Remote Gaming Duty for online gaming, 25% Machine Gaming Duty for retail gaming, and 3% financial spread betting duty on customer losses.
Barclays analysts noted that UK bookmakers’ shares have already reacted negatively to potential tax risks, with Entain and Flutter shares down 12% and 5% respectively since early August, underperforming benchmarks.
The report suggests several factors make major tax hikes less likely, including the government’s ongoing proposal to create a single ’Remote Betting & Gaming Duty’, potential job losses in retail from shop closures due to higher taxes, and the risk of players moving to offshore or black markets.
However, Barclays acknowledges that an increase in online gaming taxes seems plausible, as the UK’s current 21% rate is lower than the approximately 25% charged in large markets like Italy or New Jersey.
Their central scenario of a 5% increase in online gaming tax rate would represent approximately 7% downside risk to Entain’s 2026 earnings per share and about 4% for Flutter, before any mitigation efforts.
The report also discusses potential implications for spread betting companies like IG Group, noting that financial spread betting is currently taxed at 3% on client losses.
While it’s unclear if this rate will change, Barclays outlines potential responses if taxes were increased, including operators moving offshore, adjusting pricing, or reviewing marketing spending.
Evoke management has indicated confidence that there are ways to mitigate sensible changes to the tax rate and believes the treasury will find a balance between raising cash and ensuring the industry can remain on its current trajectory.
Source :
https://www.investing.com/news/economy-news/uk-budget-barclays-sees-lower-risk-of-major-gambling-tax-hike-4236627
