British politicians are not dropping scrutiny or opposition to the country’s new gambling tax regime, set to come into effect in just over two weeks time.

The implementation of the 40% Remote Gaming Duty (RGD) on 1 April is now an inevitability, but some MPs have made it clear that they will be keeping a close eye on what impact the new framework could have.

Kemi Badenoch’s Conservative Party has been positioning itself as something of a political ally to the gambling sector, along with its fellow party on the right of British politics, and rapidly growing rival, Reform UK.

A speech distributed by the Betting and Gaming Council (BGC) has shown Conservative MP Nigel Huddleston, the Shadow Secretary for Culture, Media and Sport, reiterating his stance on the Labour Treasury’s gambling tax proposals.

“The government must recognise that tax policy is not separate from consumer safety, it is part of it, and if Labour’s tax rises make regulated operators less viable and less competitive, illegal operators will begin to flourish outside the law,” he said.

“Second, enforcement has to match the reality of the threat. That means a relentless focus on disruption, on illegal sites, illegal advertising and illegal payments and real accountability for the platforms and providers that enable black market activity.”

The Commons is split

Like many things in British politics, however, no opinion is ubiquitously held. The Conservative front-bench may be more in the camp of iGaming, and particularly horse racing. 

But some party members like Iain Duncan Smith – MP for Chingford and Woodford Green, and Vice-Chair of the All-Party Parliamentary Group (APPG) on Gambling Related Harm – are vocal advocates for gambling reforms.

On the surface, the governing Labour Party seems to be moving against the industry – the tax rises being the biggest example of this. Calls for an even stricter tax regime, spearheaded by former PM Gordon Brown, secured the backing of over 100 Labour MPs.

Dawn Butler, Labour MP for Brent East in London, has also been calling for local governments to be given more powers to prevent gambling businesses from setting up in their areas. This campaign has also secured support from across the party.

Other Labour MPs are not entirely convinced by these developments, however. Last week in parliament, Gareth Snell, MP for Stoke-on-Trent Central, warned that an increase in remote gaming duty could force players to seek out experiences on the black market. 

In his warning, Snell suggested that the current Finance Bill should be amended to include an impact assessment to fully assess how the rises in remote gaming duty and remote betting duty would affect both gambling operators and players.

He told MPs: “I do think it is important that we consider what I believe are the genuinely unintended consequences of the changes that the Treasury will introduce and how best to mitigate them. 

“To mitigate them, though, we need to understand them, so new clause 8 simply seeks to get an independent assessment of the changes to the remote betting and remote gaming duties on the black market.”

An impact assessment is needed

Calling for an impact assessment to be published by 1 April 2027, Snell suggested that the UK government doesn’t quite fully understand how rising taxes will have a knock-on effect for player protection measures. 

In his statement, he cited a recent independent study commissioned by EY for the BGC found that, should the tax hikes come into force, there is a potential for £6bn worth of stakes that may be channeled towards the black market. 

With a lack of player protection measures, combined with a potential loss for tax revenues, Snell recognised that there is a potential for an increase in problem gambling rates. 

“I recognise that the Treasury has, as part of broader changes to the betting and gaming regulations, identified £26m for the Gambling Commission to try to mitigate some of the worst aspects of those activities, but we simply do not know what impact that will have; the assessment has simply not been done by the Government to determine whether that £26m is enough,” he continued. 

“Frankly, every penny that could be spent on helping people in this country to avoid damaging gaming and gambling, and to enjoy regulated gaming and gambling, should be spent.”

Snell isn’t the only one to warn of the adverse effects of too-high taxation rates. In the video published by the BGC, the Conservatives’ Huddleston has called on the government to recognise that its tax policy is not separate to consumer safety. 

For Huddleston, it is important that the government works alongside industry stakeholders – citing the BGC as a key one – in identifying the areas that need addressing, and to find a solution for taxation that is beneficial to both the government without fuelling the black market. 

Alongside increased enforcement, Huddleston highlighted the importance of cross-industry conversations to identify “what works” when tackling the unlicensed market.  

“The industry has a role. Regulators have a role. But most importantly, the government has a key role. That is where I want to be very clear,” he continued. 

“We are ready to work with the BGC and its members across the sector to make sure that reforms deliver their intended purpose without driving players into the arms of criminals. We will always support measures that protect the vulnerable. 

“We will keep challenging decisions that weaken the regulated market and fuel the black market. And we will continue to champion a balanced approach.” 

A knock-on effect for Gibraltar

Speaking to the Commons, Snell drew particular attention to how these tax rises will impact the gaming industry in Gibraltar – an economy that derives 30% of its taxation income from gambling brands. 

Since the tax hikes were announced back in the Autumn budget, Nigel Feetham, Gibraltar’s Minister for Justice, Trade and Industry, has not shied away from vocalising how damaging these new measures will be both for the Gibraltar gaming sector, but also wider public revenues. 

It is estimated that approximately 3,500 people are employed directly by the Gibraltar gaming industry, equating to roughly 10% of the overall population in the country. 

Gibraltar collects taxes based on operators’ gross turnover. Reducing that turnover as a result of the tax hikes, or possibly changing how UK customers interact with gambling, could have a “hugely detrimental impact over there”. 

He urged MPs to exercise caution, suggesting that the shortfall could run into “potentially tens of millions of pounds, if not hundreds of millions”.

Concerns about the impact UK taxes could have on its Iberian overseas territory are long-running. Andrew Lyman, Gibraltar’s Gambling Commissioner, warned of a ‘suffer wider structural impact’ just ahead of the November budget, for example.

Is the threat of the black market overblown?

In response to Snell’s warning, many MPs have hit back at his claims, suggesting that the threats posed by the black market are “overblown”. 

One particular MP was one of his own Labour counterparts, Alex Ballinger, MP for Halesowen. Ballinger, who also serves as co-chair of the APPG on Gambling Reform, voiced his concerns that the black market is often cited as an “excuse to avoid regulation or additional taxation” by industries that are associated with harm. 

He added: “In the gambling sector, the threat of the black market is overblown. The regulated market is dominant, and in recent years there have been lots of taxation changes that have not increased the size of the black market.” 

Ballinger explained that while it’s important to address the threats posed by unregulated operators, simply focusing on the unlicensed market could risk diverting attention from “the significant and better-evidenced harms” that impact the regulated gambling sector. 

“We should not buy into the narrative that risks from the black market should stop us making changes to keep people safe from the most harmful forms of gambling,” Ballinger continued. 

While the new taxes are only a few weeks away from introduction, the conversations surrounding their effects are likely going to continue for the foreseeable future. 

This is the most substantial tax rise that the government has introduced for the gambling industry in quite some time; however, its effectiveness is yet to be seen.