Andrew Lyman, gambling commissioner and executive director for the Gibraltar government, has branded the rationale behind any significant tax increases in the UK as “disingenuous”.  

Chancellor Rachel Reeves is scheduled to announce her Autumn Budget on 26 November, with tax increases for the UK’s gambling industry expected to be included in some form. 

Concerns have mounted that Reeves could be set to dramatically raise the rates in line with suggestions from think tanks such as the Social Market Foundation and The Institute for Public Policy Research.

In the current system, pool and general betting are taxed at 15%, while online casino is taxed at a rate of 21%. 

The think tanks suggested upping the general betting duty to 30%, and remote gaming duty (RGD) for online casinos to 50%.

Taking to LinkedIn, Lyman spoke of the very real threats posed to the industry by potential tax hikes, which may have already been dismissed as “scaremongering”. 

Lyman wrote: “The idea that the industry can absorb significant top line tax rises and not suffer wider structural impact and loss of bottom-line profit is disingenuous.  

“Regardless of what people think about the industry, normal economic theory applies to the sector, and it is not ‘scaremongering’ when it references ( on the basis of valid external analysis) the likelihood of job losses and cost reduction to combat loss of profit. 

“Neither can individual gambling verticals be ‘ringfenced’ from each other. Albeit cross-selling has been curbed by regulation.” 

Lyman went on to point out that the significant regulatory changes already implemented in the UK market have hampered operators, but he did note there was potentially some headroom for taxes to increase, albeit at a far lower rate.  

He continued: “What seems to have been forgotten is that the industry has already absorbed a myriad of UK regulatory changes such as stake reductions on slots and a statutory levy for research, education and treatment. The implementation of financial risk checks are still being implemented.  

“My view is that there is little room in the betting duty rate (15% is just about optimal), but there may be a little ‘juice’ in the RGD rate ( but no more than four to five percentage points).

“Above that, the pips will be beyond squeaking and there will be genuine pain. Pain will mean not just reduced growth but, as cogent examples demonstrate, tax yield would reduce in the medium term,  perhaps even in the shorter term.

“There is a tipping point, and the nearer RGD gets to 30% the more amplified the economic impact and the chances of policy failure and irrecoverable damage to the sector. Once the regulated sector is gone, it’s gone.” 

A measure requiring players to set mandatory limits before making their first deposit with an operator came into effect on 31 October. 

A ban on operators offering bonuses which apply to more than one vertical, in addition to a limiting of wagering requirements to 10x, are also set to come into effect in the UK in December. 

So far this year, the government has already opened and concluded a consultation into the possibility of creating a single tax rate for the gambling industry.  

The Remote Betting and Gaming Duty (RBGD) would unify the tax rates for pool betting, general betting and online casino.  

Concluding his remarks, Lyman noted that UK tax increases could affect Gibraltar’s own gambling market.

“Disproportionate UK tax rises have the capacity to harm the Gibraltar economy,” he wrote. “Gibraltar is part of the British family, and any UK tax rise is amplified in Gibraltar because UK regulated gambling is a key pillar of the economy.  

“Gibraltar-based UK facing firms pay circa £750m to the UK exchequer in gambling taxes (on a point of consumption basis). UK-facing Gibraltar based operators are dual regulated.  

“UK political support for Gibraltar is best expressed by creating conditions that allow the Gibraltar economy to be self-sustaining. I still remain hopeful that politics (even internal party politics) will not trump sensible fiscal policy and economic literacy.”

The post Gibraltar regulator: Chance of “irrecoverable damage” to UK sector due to potential tax hikes first appeared on EGR Intel.