Leading nations around the world are poised to significantly increase taxes on their gambling and iGaming industries as part of their fix to right massive budget shortfalls.
In the U.K. the new Labour government–facing a so-called £22 billion (US$28.55bn) “black hole” in finances–are planning on hiking betting taxes by some £3 billion (US$3.89bn) in the upcoming October 30 budget, say highly-placed sources.
Now, following tax rises in the Netherlands and Sweden, which are increasing their rates to 22 percent and 37.8 percent, respectively; France and a number of other countries with sophisticated regulated gambling markets are also planning to hike assessments.
And levies in America’s super-competitive sports betting jurisdictions–where taxes, for example in New York state, are already as high as 51 percent–are also poised to surge.
The states of Illinois and Ohio, for instance, have recently doubled their taxes on sports wagers; with Illinois employing a progressive rate of tax plateauing at 40 percent and Ohio’s surcharge now riding at 20 percent.
Swingeing Taxes
Such real and proposed tax raids on these regulated gambling industries has fired the perennial fear that swingeing taxes will kill-off legal businesses — and push punters back to illegal operators.
Financial logic dictates such a logical outcome, say gambling industry leaders; among them Flutter Entertainment CEO Peter Jackson.
“If U.S. states are genuinely trying to maximise their tax revenues, they should be very thoughtful about pushing the tax rates up,” Jackson (pictured above) warned this week.
“If you push taxes too high, then people will use illegal operators and tax revenues will go down,” argued the boss of Flutter, which is now headquartered and principally listed on the New York Stock Exchange.
Most gaming experts concur that a tax rate of no more than 20 percent would be the most equitable and sustainable to build a legal, responsible and fully compliant gambling industry.
Punitive fiscal raids on sports betting and iGaming–set to be worth around US$63 billion (£48.51bn) in America by 2030, while gambling overall in the U.K. contributes over £7 billion (US$9.08bn) annually to the economy–would also set back years of good work to combat the negative impacts of betting addiction, protecting the young and vulnerable.
Major Hits
Smaller and mid-table operators will be those companies most affected by tax rises, Jackson told paper-of-record The Financial Times, because big operators such as Flutter–the world’s largest sports betting and iGaming operator and owner of the storied FanDuel, PaddyPower, Sisal and Betfair brands, et al–have the financial resources to weather increased duties.
Amid the fevered threat of changing tax regimes, shares in major gambling companies around the world have taken major hits.
The news earlier this week that U.K. chancellor Rachel Reeves plans to impose a £3 billion raid on British iGaming sent shares in FTSE 100-listed Entain–the owner of Ladbrokes, Coral, Sportingbet and many others–tumbling by 12.6 percent, while the paper value of FTSE 250-listed Evoke, owner of blue chip William Hill, plunged 15.4 percent.
Flutter’s shares on its secondary London Stock Exchange listing fell 8.8 percent and those of the Rank Group slipped by near seven percent.
Meanwhile, rumoured increases in betting taxes in France–effectively currently at 60 percent and already the highest in Europe–has cast serious shade on the just-now €2.45 billion (£2.04bn/US$2.65bn) French lottery giant La Français des Jeux’s (FDJ) acquisition of Swedish-origin iGaming brand Kindred.
FDJ shares fell by around 10 percent on the tax news and if speculation turns to reality the price paid for Kindred will look very high indeed, never mind the impact on the French giant’s stated ambition to become a true international player.
Watch this space.
