Gambling companies are facing a significant drop in their shares amidst concerns that the Government is planning to increase taxes on online casinos and bookmakers in the upcoming Budget. The speculation has caused a ripple effect in the industry, with Ladbrokes and Coral owner Entain taking the lead on the FTSE 100 Index with a 9% decline in shares following reports that Chancellor Rachel Reeves is considering doubling taxes to raise up to £3 billion.
The potential tax hike comes as the Government aims to address a £22 billion deficit in public finances, as reported by The Guardian. The announcement has sent shockwaves through the sector, impacting competitors like William Hill, 888 group Evoke, Paddy Power owner Flutter, and Rank, which owns Mecca Bingo and Grosvenor Casinos, all witnessing declines in share value.
Chancellor Reeves is expected to unveil the tax increase in the Budget scheduled for October 30. Plans are said to include doubling the 15% general betting duty on high-street bookmakers’ profits and hiking the gaming duties, currently set at 21%, affecting online players. The move follows recommendations from influential think tanks, including the Institute for Public Policy Research and the Social Market Foundation, advocating for higher levies on gambling firms.
Russ Mould, investment director at AJ Bell, noted the potential consequences of the tax raise, stating concerns about a possible surge in illegal gambling activities and the likelihood of companies passing on the additional costs to customers. He highlighted the challenges faced by the sector in terms of increasing regulations and taxation, emphasizing the need for firms to navigate these headwinds effectively.
The gambling industry is bracing itself for the financial impact of the proposed tax changes and is preparing to engage in discussions with the Government to address the concerns raised by the potential tax raid. As the Budget announcement approaches, stakeholders in the sector are closely monitoring the developments and strategizing their response to the evolving landscape of regulatory and fiscal challenges.