Chancellor Rachel Reeves has delivered a major blow to Britain's online gambling industry, announcing a dramatic increase in taxes that will see remote gaming operators pay billions more to the Treasury.
Budget Shock for Online Gambling Sector
In her second budget announcement, the Chancellor confirmed that remote gaming duty will nearly double from 21% to 40% starting April next year. The move represents one of the most significant tax increases on the industry in recent years and caught many investors by surprise with its scale.
The financial markets reacted immediately, with shares in UK gambling companies beginning to tumble even before Reeves' official statement. This early sell-off occurred after the Office for Budget Responsibility accidentally published documents revealing the planned tax raid on the sector.
Mixed Fortunes for Gambling Giants
The announcement triggered a dramatic day on the stock market, with different companies experiencing varying fortunes. Evoke PLC, which owns William Hill and 888, saw its shares plummet by more than 10% as investors digested the news.
However, larger and more diversified players demonstrated remarkable resilience. Companies including Flutter Entertainment (owner of Paddy Power) and Entain (Ladbrokes' parent company) managed to recover most of their losses by mid-afternoon. Market analysts suggested that firms with substantial international operations and diverse revenue streams would be better positioned to absorb the tax hit.
The recovery pattern highlighted a key distinction in the market's assessment: purely online-focused operators face the greatest impact, while companies with physical premises and broader business models appear better insulated.
Funding Social Measures Through Gambling Tax
The Treasury expects the duty changes to raise an additional £1.1 billion by the 2029-30 financial year. This substantial sum will contribute to funding government priorities, including the decision to lift the two-child cap on child benefit.
Reeves explicitly linked the gambling tax increase to this social measure during her budget speech, stating she was targeting online gambling specifically because it's "associated with the highest levels of harm."
Meg Hillier, chair of the Treasury select committee, welcomed the Chancellor's stance, noting that her committee had recently accused industry lobbyists of "scaremongering" about potential tax increases. Hillier emphasised the distinction between different forms of gambling, acknowledging the cultural contribution of racecourses and bingo halls while criticising online slots that can "quickly drain the bank balances of vulnerable people."
The budget did provide some relief for traditional gambling sectors. Horse racing bets will be exempted from tax increases, recognising the sport's heavy reliance on gambling income, while bingo duty of 10% will be abolished entirely. High street bookmakers also avoided increases for in-person betting.
The government acknowledges that the full potential tax take of £1.8 billion will be reduced to £1.1 billion because they expect some customers to bet less or switch to unregulated markets as operators pass on the increased costs through less attractive odds and bonuses.
