Date: October 14, 2024, 07:01h.
Last updated on: October 14, 2024, 07:01h.
UK-based betting companies saw a decline in their shares as news of a potential tax increase by the British government circulated in the market.
According to a report in The Guardian, there are discussions within the Labour Party government about raising taxes on the industry to address a financial shortfall of £22 billion (US$28.7 billion).
Although a final decision has not been made, officials are considering the possibility of increasing taxes by £900 million (US$1.2 billion) to £3 billion (US$3.9 billion), as per The Guardian.
The gambling sector contributed £3.4 billion (US$4.4 billion) to UK tax revenue last year, accounting for approximately 0.3% of government earnings.
There is speculation that the tax hike might be included in Labour’s upcoming budget announcement scheduled for this month.
Evoke Faces Largest Impact
Evoke [LON: EVOK], which operates William Hill and 888 in the UK, experienced the most significant drop in share prices, falling by 15% on the London Stock Exchange.
Entain [LON: ENT], the co-owner of BetMGM with MGM Resorts in the US, also faced a substantial decline of 14%. The company owns well-known UK betting brands like Ladbrokes and Coral, as well as bwin, PartyPoker, and various European brands.
Shares of Flutter Entertainment [LON: FLTR], the owner of FanDuel and other brands such as Betfair and Paddy Power, dropped by 7%, along with those of Rank Group [LON: RNK], the largest land-based casino operator in Britain.
Collectively, these four companies lost a total market capitalization of £3.25 billion ($4.2 billion) in a single morning. However, there was a slight recovery in their share prices by mid-morning UK time.
In the previous Conservative government, gambling regulations were strengthened with various measures being gradually introduced to the industry. These initiatives included player affordability checks and online slot stake limits.
While the industry hoped for a continuation of these reforms under Labour, concerns arise about potential additional restrictions on the sector imposed by the government.
Proposed Tax Doubling
Reports suggest that the Treasury is evaluating a study by the Institute for Public Policy Research (IPPR), a left-leaning thinktank. The research proposes doubling taxes on “higher harm” products like slots and casino games, which could generate £2.9 billion (US$3.8 billion) in the next year.
The Betting and Gaming Council cautioned that jurisdictions implementing “disproportionate” taxes have observed a rise in illicit online gambling activities.
According to The Guardian, a source from the industry expressed concerns about donations made by the anti-gambling lobby to the Labour Party, raising questions about potential influences on policy decisions.