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British gambling company Betfred has warned that all of its 1,300 shops could be forced to close if the government increases taxes on the industry in next month’s Budget.
Chancellor Rachel Reeves has indicated that she is considering raising levies on gambling companies, saying last month that “there is a case for gambling firms paying more”.
The Treasury discussions follow an intervention from former prime minister Gordon Brown calling on ministers to raise levies on the industry to help lift children out of poverty. He said that gambling tax increases could generate £3.2bn a year for the Treasury.
In a letter seen by the Financial Times, Betfred has written to Reeves and culture secretary Lisa Nandy arguing that changes to tax “would produce the opposite of their intended effect: reducing tax revenue, [and] accelerating black market growth”. Chief executive Joanne Whittaker has requested a meeting “at the earliest opportunity” with Reeves.
Fred Done, chair of the group, and who set up the Warrington-based bookmaker in 1967 with his brother Peter, told the BBC in an interview that an increase of that size would put 7,500 jobs at risk.
“It [tax] doesn’t even need to go up to 50 per cent. If it went up to anywhere like 40 per cent or even 35 per cent there is no profit in the business. We would have to close it down. I’m talking job losses. We’re talking probably 7,500,” he said.
About 330 of Betfred’s high street shops are already lossmaking, according to one person close to the group.
They said that any tax increase would put more shops at risk, while the sorts of large rises being put forward by some think-tanks would result in the “worst-case scenario”.
The chancellor is widely expected to raise taxes in her November 26 Budget to fill a fiscal hole that economists estimate at between £20bn and £30bn.
A report from IPPR think-tank in August proposed targeted tax rises on profitable internet gambling such as online casinos, slot machines and high-stakes betting.
The UK has about 5,900 licensed betting offices, employing around 46,000 people nationwide.
“Analysis indicates that increasing tax rates to the levels proposed by the IPPR would render the entire retail betting sector financially unviable, leading to the closure of betting shops across the country and the loss of approximately 46,000 jobs,” the letter from Betfred said.
The Treasury said: “We do not comment on speculation around future changes to tax policy.”
The gambling sector is exempt from VAT, and winnings from gambling are also not taxed, although the sector pays extra taxes on online casino gaming stakes, slots and gaming machines, sports fixtures and horseracing.
Executives at rivals such as Flutter, which owns brands like Paddy Power and Sky Bet, William Hill owner Evoke, Entain and Rank Group have also warned over the impact of potential tax rises.
Shares in British gambling companies have fallen sharply after reports in August and October that the government was looking at raising taxes on the sector. Analysts at Jefferies have said that “the proposals apparently being considered would all but wipe out bookmaker profitability in the UK”.
