Brown’s gambling tax raid would cause untold damage to Reeves, says BGC CEO Grainne Hurst

This week, Gordon Brown decided to grab the headlines with a magic wand and an apparent quick fix for child poverty.

For a former chancellor who built his reputation on prudence, he seized on suggestions touted by two think tanks, which were, frankly, anything but thoughtful, and which would do untold damage to one of Rachel Reeves’s quickly vanishing allies in her mission to get our industries growing again.

According to Brown, child poverty would be resolved at a stroke by doubling taxes on betting and gaming.

These wild suggestions caught the eyes of experts, including ours, for a number of reasons. First, the figures being used are incorrect. The betting and gaming sector does not raise £2.5bn in tax – the figure is actually £4bn – along with contributing £6.8bn to the economy while supporting 109,000 jobs.

It is also a vast departure from Brown’s own solutions on betting and gaming taxes when he was in charge of the public’s finances. Long since hailed as a masterstroke, his interventions raised more tax, secured more jobs, and created one of this country’s global business success stories.

In 2001, Brown abolished the then model of taxing punters’ bets, switching instead to a tax on bookmaker profits. In fiscal terms, it was an act of near genius. Customs and Excise had rightly predicted a huge drop in gambling duties because punters could avoid paying the tax by simply betting online.

As a result, the UK’s major operators, now the BGC’s members, shifted operations abroad. But thanks to Brown, the then three biggest firms – William Hill, Coral Racing and Ladbrokes – repatriated offshore operations back to Britain, creating new jobs.

It did something else – the tax break had a direct effect on punter behaviour. Betting stakes placed by punters quadrupled following the law change, with the value of bets nearly doubling from £27bn to £53bn.

That change meant the Government received much less money from individual bets, yet nearly all of the revenue was recovered because punters placed more of them. More betting meant more tax. When Brown was Chancellor, he thought that was a good thing.

But this – as well as any notion that taxation is a difficult balancing act, full of unintended consequences – has been loudly abandoned by the former “iron chancellor”. He may naively think it will raise billions more, and attacking the gambling industry gave him the cover he sought in attacking the Government over child poverty. But we are not fooled.

The reality is that think tanks for hire, like the Social Market Foundation and IPPR, are in bed with anti-gambling prohibitionists who simply don’t like our industry. They are quite open in saying they think that betting online – enjoyed by millions – is “harmful”, and they presumably want to see fewer people doing it (although, at the same time, their assumptions on revenues are based on people still doing it – go figure).

How can you reduce the number of people betting and increase taxes simultaneously? The so-called solutions aired this week conveniently ignore the obvious economic impact of increased taxes.

While the intended consequences of 2001 were a shot in the arm to this sector, and the thousands of decent men and women who work in the industry, making it a world-beater, the unintended consequences of further tax hikes now would be the opposite – significantly degrading the offer to punters.

That will have dire consequences. First, it could force punters to abandon their hobby, as horse-racing is painfully finding out, or it will drive them to the unsafe, unregulated, and growing black market online – an issue the IPPR conveniently glides over. Overbearing measures and higher costs (due to tax rises) give the black market a competitive advantage over the regulated sector.

A recent study found 1.5m Britons stake up to £4.3bn with illegal outfits each year. They don’t have any protections for young people, no standards on safer gambling, and they don’t return a penny to the Treasury.

Recent government changes, published in a white paper in 2023, have cost my members over a billion in lost revenue.

On top of that, we are making record contributions to the Horserace Betting Levy – an additional tax on racing to directly support the sport. And we will now fund a £100m yearly pot to pay for research, prevention, and treatment to tackle problem gambling – something that affects just 0.4pc of the adult population in England, according to the NHS Health Survey. Not to mention pressures common to all businesses since last year’s Budget, such as increases in employer National Insurance rates.

I feel sorry for Reeves. Being Chancellor is not an easy job, especially now, and that’s something that Brown, of all people, should understand. I have always had huge respect for Brown. I just felt Reeves deserved something better than the no doubt unwanted “advice” from one of her predecessors ahead of an incredibly difficult Budget. The intervention reminded me of how Edward Heath would be constantly looking over Margaret Thatcher’s shoulder, chuntering away.

Betting and gaming is something enjoyed overwhelmingly safely by 22.5m adults in Britain each month – that’s roughly half the adult population. Working-class sports like racing, rugby league, darts, snooker and lower-league football depend on its funding. Most big firms offer sports betting and gaming. But in the end, they are one business, and a tax hike on one part of the firm hurts the whole company, and it could well hurt the funding of those sports, as well as threaten jobs.

In the end, all this shows is that there are too many politicians – former ones, as well as current ones – who take a snobbish objection to people who enjoy a bet, whether that’s online, on the high street, in casinos, or on bingo. They couldn’t care less about the men and women who work in the industry. And they wonder why Reform is on the rise when our politicians look down their noses at what millions of working-class people choose to do with their own money.

At the BGC, we aspire to something more constructive, and we want to work with – not undermine – the Chancellor in her plan to turbocharge economic growth. Naive tax plans and political grandstanding won’t help with any of that.

Grainne Hurst is chief executive of the Betting and Gaming Council