Betting and Gaming Council (BGC) CEO Grainne Hurst and chair of the trade body’s tax committee, Stephen Hodgson, yesterday told the Treasury Select Committee that increasing gambling taxes would be detrimental not only to those working in the industry but to customers as well.

With the Autumn Budget to be unveiled on 26 November, a two-hour meeting was held on Tuesday, 28 October, to discuss the reasons for and against raising gambling taxes.

Also giving their testimonies were Institute for Public Policy Research (IPPR) interim associate director of economic policy and AI Carsten Jung, Social Market Foundation (SMF) director Theo Betram and retired Paddy Power co-founder Stewart Kenny.

The trio were there to argue the case for raising gambling taxation, claiming it would lead to a reduction in gambling-related harm for players but also raise billions in taxes which could be used to help tackle child poverty. These estimates have been disputed.

Their departure saw the introduction of BGC duo Hodgson and Hurst. 

EGR details the key comments from the pair, while also outlining Kenny’s take on the divide between sports betting and online casino and why he believes raising taxes would lead bookmakers to “act responsibly”.

Grainne Hurst, BGC CEO

“There would be absolutely no doubt that customers would change their behaviour if there was any further additional increase in tax on the industry. We know that the black market is already a really serious threat for the regulated sector in the UK.

“They also don’t provide any player protections. We know that if there are any additional tax increases on the industry, the regulated operators have three real levers that are open to them, which is price, promotions and products.

“What we would see is that cost would increase for the customer, their odds would get worse, their offers would get worse. The return to players would be reduced. Customers are price savvy and price sensitive.

“They would obviously notice the change. They would still want to be betting on things as part of their hobby, but they would go to somewhere which is far more attractive, which is already in the black market.

“I think we need to be really careful about any additional further tax rises on the industry, because we know that if you tax something more, you get less of it, and customers would change their behaviour.”

Hurst went on to point out BGC-commissioned research by accountancy firm Ernst & Young that projected up to 40,000 job losses could be seen should the most drastic tax hikes be implemented.

“We know from EY modelling, who have looked at some of the proposals from the previous session that actually worryingly, there would be 40,000 potential job losses if we were to see their proposals come into force, the black market would grow by another £8bn worth of staking, and there would be a huge hit to the GVA of the industry.

“The BGC’s role is really to highlight to the committee and to the Treasury what negative impacts any additional tax rises would have on the whole of the betting, gaming industry and the jobs that it supports.”

Stephen Hodgson, BGC chair of tax committee and former Entain deputy group tax director

“You can increase the taxes, increase rates, and end up with less tax and fewer consumers in the regulated market. You heard from the previous panellists about what’s happened in the Netherlands.

“I think there is no doubt there has been an effect there, where the tax rate has been increased by a few percentage points earlier this year, and the authorities there themselves say that that has had a negative impact on the amount of customers in the regulated market, with the knock on consequences that has for tax revenue, which is significantly below what was forecast this year in the Netherlands.

“There are examples in other places as well, other countries. Having spent most of my career in and around this industry, I can tell you that we did see a direct relationship between tax rates and how sensible those rates were and the number of customers in the regulated market. We continue to see that effect today.

“You could look at how things have changed in response to previous regulatory change in the UK. The previous witnesses mentioned the restrictions on properties. Since then, we’ve seen, 2,500 betting shops closed, between 10,000 and 15,000 jobs lost on the high street.

“That is a direct consequence of those kind of changes. There are behavioural changes. And I think the most recent one in the UK is probably, if you just look at what has happened on alcohol duties, the alcohol duty regime was reformed and duties were generally increased, particularly on products like wine and spirit.

“And what the Treasury has said since then is that alcohol duty receipts are down since those increases. We do see these kind of responses.”

Stewart Kenny, Paddy Power co-founder

“The government want to raise revenue, and this is a Treasury committee. As I said, doubling up tax in Ireland virtually doubled the revenue. My position is to encourage the bookmakers to act responsibly through taxation, to get them back to where they started, encouraging people to have bets on horses and normal events and to take them out of the more addictive forms of gambling.

“If it became less profitable for the bookmakers in the online casino, it pushes them back into raising revenue through gambling on horses. I know they’re going to say that I left eight or nine years ago, but I’ve looked at the betting industry and they are actually pushing people stronger now than they were because I had a bee in my bonnet at the time.

“It was one of the reasons I resigned. They’re pushing people stronger towards the online casino than they were then.”

The post BGC CEO warns MPs about the negative cost of raising gambling taxes in Autumn Budget first appeared on EGR Intel.