Gordon Brown adds voice to growing calls for Labour to hike gambling taxes

Former Prime Minister and Chancellor of the Exchequer, Gordon Brown, has weighed in on the debate around gambling tax, bringing in yet another voice to an increasingly fragmented Labour Party which is struggling to decide its approach to the industry.

Writing an op-ed in The Guardian, Brown argued that raising taxes on the ‘extraordinarily profitable gambling and betting industry’ should be the ‘first step’ in raising revenue to tackle child poverty, an issue which the Labour government has become increasingly concerned about.

His comments come as Rachel Reeves, current Chancellor of the Exchequer in PM Keir Starmer’s cabinet, and her HM Treasury evaluate whether to make the biggest change to betting and gaming taxation in many years.

The Treasury has been seeking feedback on a proposed merger of the three types of gaming tax – the 21% Remote Gaming Duty on online gaming; 15% Pool Betting Duty on sports pools, but not on horse and greyhound racing; and the 15% General Betting Duty on fixed odds betting, with 10% on spread bets and 3% on financial spread bets.

“Gambling levies aren’t the only source of revenue that could pay to alleviate child poverty. But this should be one straightforward budget choice,” Brown wrote. “The government can fulfil today’s unmet needs by taxing an undertaxed sector. Gambling won’t build our country for the next generation, but children, freed from poverty, will.”

Gordon Brown no stranger to betting tax

Though he has not held a cabinet role nor been an MP for some time, Brown’s input could be influential. The Scottish-born politician was Chancellor of the Exchequer from 2 May 1997 to 27 June 2007, and PM from 2007 to Labour’s electoral defeat in 2010.

He has now been brought back in by the Labour government in a consultancy role, focusing on two issues – child poverty and gambling taxation. This has led him to join some dots and come to the conclusion raising gambling tax will help alleviate child policy.

“Gambling levies aren’t the only source of revenue that could pay to alleviate child poverty. But this should be one straightforward budget choice. The government can fulfil today’s unmet needs by taxing an undertaxed sector. Gambling won’t build our country for the next generation, but children, freed from poverty, will.”

The 2005 Gambling Act was passed during Brown’s term at the Treasury, ushering in the new era of regulated online betting and gaming in the UK and creating the UK Gambling Commission (UKGC).

Though Brown may not have had a direct role in drafting and passing the Gambling Act, with the bill originating in the DCMS, as Chancellor he did play a direct role in deciding how the industry should be taxed.

While Chancellor, he arguably introduced the biggest tax change UK gambling has ever seen, abolishing betting taxes paid by punters in 2001. Instead of customers paying a tax on their bets or winnings, taxes on bookmaker profits were raised.

Though this of course led to the industry paying more tax, it led to betting stakes increasing significantly due to bookmaker customers, which at the time would have been much more retail based, not having to factor in betting tax when making their horse or football selections.

According to a Guardian report from 2005, the value of bets rose from £27bn in 2001 to £53bn in 2005, the year the Gambling Act was passed. The gambling industry now finds itself operating in a different era to two decades ago, however.

Business and consumer dynamics have changed, concerns about its societal impact are rife, sports sponsorships have pushed its visibility to a huge extent, and the Gambling Act has been subject to a nearly three-year long review to make it more applicable to the digital environment of the 2020s.

Labour needs cash

When the Labour government came into power in the July 2024 election it made it clear that it was committed to seeing out the recommendations of the Gambling Act review White Paper, which had begun in late 2020 under its Conservative predecessor.

For the most part it has stuck to its guns on this, with the DCMS and UKGC engaging in consultations on and implementing rules around bonuses and financial risk checks, among other key areas of the review.

Pressure is mounting on Reeves to fill a £50bn black hole in public finances, however. The government needs to find revenue if it is to achieve its targets, not just tackling growing child poverty as noted by Brown but also support other projects like infrastructure development, revitalising the NHS, privatising railways, and raising defence spending.

The UK betting sector, which generated gross gambling yield of £15.6bn as of March 2024, is an easy target for the government to find some of this revenue. Groups like the Social Market Foundation (SMF) are arguing for a hefty general betting duty of 25% across all products, and the group’s reports have been referenced by Brown in his call for higher tax.

His main source of inspiration though appears to be the Institute for Public Policy Research (IPPR). The think tank has proposed scrapping the two-child limit on means-tested benefits and the household benefit cap, which it estimates would cost around £3bn – arguing that this could be subsidised by gambling taxes.

As expected, this proposal has been met with opposition from the Betting and GamingCouncil (BGC). The trade body issued a statement lambasting the proposal as ‘economically reckless’ and ‘financially misleading’, and at risk of pushing consumers to the black market.

Increasing taxes may serve a double purpose also, potentially easing some of the pressure the government is feeling from advocacy groups like the All Party Parliamentary Group on Gambling Reform (APPG GR), which largely consists of Labour backbenchers although led by veteran Conservative Ian Duncan Smith.

The party is far from united on this topic, however. Backbenchers and the government clearly have a difference of opinion, and not all backbenchers hold the same view either – MPs Dawn Butler and Richard Baker both shared differing views this month, for example.

Ultimately though, money talks. Reeves has to find revenue from somewhere, and though gambling taxes won’t be the silver bullet to the government’s financial woes, they will fill a gap.

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