It’s not death… but it is taxing – Britain’s betting industry lives on the leaks and rumours of the upcoming Budget, a state of play that is not healthy.

Horse racing appears to have scored a big win earlier this week when it was reported by the Telegraph that the heritage sport was going to be exempted from tax hikes on wider betting activities.

Yet with just two weeks to go until the Autumn Statement is delivered, it comes across a meagre victory in a battle of lobbying and tabloid headlines surrounding this Labour government’s second budget.

The industry’s arguments have been loud and clear for the past few months, with comparisons made with the Netherlands and the growing threat of the black market put as the counterpoint to tax rises. But with politicians appearing numb to the fracas of tabloid headlines, perhaps the most effective evidence should be taken from leadership and the stark choices facing them.

Sam Sadi, CEO of LiveScore Group, operator of the LiveScore Bet and Virgin Bet brands as well as its flagship LiveScore media app, heads up a company with experience of both the UK and the Netherlands – at least it did have experience of the latter until exiting this year.

“Our decision has been validated, and we’ve understood the direction of travel and the kind of ideology that the government, obviously related to the regulatory body, has adopted,” Sadi told SBC News.

“I think we do benefit right now from having exited earlier, because a lot of capital was wasted in the country trying to get to profitability.”

Sadi spoke to us at the SBC Summit in Lisbon this September when the tax debate was beginning to heat up with the speculation of tax rises above a GGR of 50% . At the time, he shared that at LiveScore ‘we don’t think the UK government is going to act so irresponsibly’.

While it has looked more and more likely that the UK will increase taxes on gaming in some form, the Netherlands stands out as ground-zero on the consequences of applying abrupt taxes.

Since re-regulating its online market in October 2021, the Netherlands has introduced much stricter rules around advertising in particular, coming into effect in 2024 and 2025. The tax increase to 34.2% of gross gaming revenue (GGR) on 1 January this year, set to increase to 37.8% in 2026, is a bitter cherry on a difficult cake for the industry.

Sadi remarked: “I think what the Netherlands has done to regulate the industry and then, within two years, increase taxes substantially but also increase regulatory and compliance costs in such a manner that all your investment plans and projections have been made obsolete, is very unusual.

“While the size of the industry may not have been impacted by it, all it has done is consolidated the industry towards two or three operators, and it excluded all smaller operators like myself.

“I don’t think the UK government will be so short sighted, and I think they’ll invest in a more sensible manner.”

An Irish goodbye or French exit from Dutch market?

Betting and racing have both gone into campaigning overdrive in opposition to rumoured tax increases – rumours which are looking increasingly like pledges as Chancellor of the Exchequer, Rachel Reeves, hinted earlier this year that operators should ‘pay their fair share’.

In response to tax raises, the Betting and Gaming Council (BGC) has been involved in an extensive media campaign and has met with various political figures. The British Horseracing Authority (BHA), meanwhile, started its #AxeTheRacingTax campaign and called strike action on 10 September, the latter drawing criticism from the BGC.

Should reports from The Telegraph last Sunday prove accurate, racing’s campaign may have paid off. This week, Dom Tomlinson MP, Exchequer Secretary to the Treasury, hinted at potential further engagement with the BHA when responding to a question in the House of Commons from Sally Jameson, a fellow Labour politician and MP for Doncaster Central.

“My honorable friend is a strong advocate for the horse racing industry and for the jobs and economic activities in her constituency,” Tomlinson said. “I was glad to meet with her just last week to discuss the topic that she raises today as part of the consultation.

There has been engagement with the horse racing industry to identify any potential unintended consequences for their sector and how they might be mitigated. The government will respond to the consultation of the budget and …. I will happily meet with the BHA.”

The challenge the industry faces is in convincing other politicians that the worst case scenario of the Netherlands is a serious one to consider. The MPs of the Treasury Select Committee did not seem too receptive to this comparison when made by Grainne Hurst, CEO of the BGC, during a hearing late last month.

For LiveScore’s Sam Sadi, the impacts of heavier taxation on betting are ‘not that different from any other industry’, and he added that ‘the consequences of increasing taxes are quite well understood’.

“That would mean we spend less on marketing, or we have to cut costs, and that means we employ less,” he said. “These are all known impacts of what happens when you increase taxes on any industry, and I think the approach of legislators to industries such as online gambling has been that taxation doesn’t have these impacts.

“But they fail to understand that all the operators, all the industry have had to have been forced to cut costs as a result of decreasing margins, and that has a direct impact on the economy.

“You may be getting more taxes in the first place, but you’re hurting the overall economy. It’s not a conversation specific to our industry. It’s the same as if you try to add taxes to e-commerce, and e-commerce starts shrinking as an industry.”

Improvise, adapt, overcome

LiveScore itself stands as an example of what can happen in the worst case scenario of taxation negatively impacting a business – that business will simply be forced to withdraw from the market.

Again, the Netherlands comes up here. The heavier burdens of taxation meant that it was no longer worth it for LiveScore to carry on operating in the country, and so it reduced efforts in more cost effective markets.

While Sadi may be confident that the UK will not share the ‘irresponsibility’ of its counterparts in the Netherlands, and LiveScore as a brand may well be positioned to ride out tax challenges, other small and medium sized bookmakers may not be so lucky.

The UK’s tax debate has seen two scenarios. The first of these was a merger of 21% Remote Gaming Duty (RGD) and 15% General Betting Duty and Pool Betting Duty to one 21% rate. This was supported by the likes of former PM Gordon Brown as a means to alleviate the UK’s admittedly dismal rates of childhood poverty.

In the event of horse racing’s exclusion, the 20% machine games duty (MGD) and 21% RGD will bear more of a burden. It has been predicted that the former could rise up to 50% and the latter to 40%.

For smaller bookmakers, concerns still abound that tax hikes could wipe them off the map. David Pluck, an independent bookmaker with a chain of shops in North West England, told the Racing Post this week that “there won’t be any betting shops left very soon if the biggest tax increases being talked about come in”.

In LiveScore’s experience of the Netherlands, the firm was able to dodge the tax bullet and reinvest elsewhere. For firms like these with an international presence this is always an option, even if it means departing what has been one of the world’s most lucrative and widely regarded regulated markets in the UK.

“It allowed us to shift capital and focus to other markets, and that’s also something that regulatory bodies understand,” Sadi reflected on the Dutch exit.

“Companies have a choice where to allocate capital, and that’s not just a financial investment that we’re no longer making into the Netherlands in forms of marketing, but also in terms of employment.

“We obviously don’t have a Netherlands-facing team anymore, and that is employment that the market no longer gets from us and from many other operators. We’ve shifted our focus and our capital to markets where we think we have a long term prospect of reaching profitability – that’s just economics 101.”

Rachel Reeves took an unusual step earlier this week when she made a speech from Downing Street ahead of the budget, something not usually done in UK politics. For many observers, this was effectively a confirmation that taxes will go up.

Understandably, much of the discourse has centred around income tax, revisions to National Insurance contributions (NICs), retail VAT, stamp duty – the big ticket measures that will impact the man and woman on the street the most.

It seems that both businesses and consumers have no choice but to wait and see – and speculate – on what is to come when Reeves walks out of Downing Street with a red briefcase on 26 November in what will be the definitive judgment of UK gambling and its five years under scrutiny.

“Decisions on tax policy will be made at the budget,” Tomlinson put it bluntly earlier this week when responding to a question from another MP on taxes on horse and greyhound racing bets, suggesting that the Treasury’s lips are sealed for the time being.