Consultation claims of exponential growth in remote gambling based on 'false comparison'

Government claims there has been an "exponential" increase in online gambling, which could lead to an increase in general betting duty (GBD), have been challenged as being based on a "false comparison".

On Monday the Treasury launched a consultation titled 'The Tax Treatment of Remote Gambling' with proposals to harmonise all such wagering into a single tax.

Betting on sports such as horseracing is currently subject to a 15 per cent duty on gross profits, either through GBD or pool betting duty, while remote gaming duty on games of chance such as roulette or bingo is levied at a rate of 21 per cent.

There are fears that the government's plans will mean GBD rises resulting in what the BHA described as "significant unintended consequences for both racing's finances and its workforce".

The consultation claims that since remote gambling was first developed it had "grown exponentially", adding: "The three-tax system needs to adapt to reflect the dynamic and expanding nature of the sector."

It also includes a claim that remote gross gambling yield (GGY) – the amount retained by operators once winnings have been paid out – has increased by 208 per cent between 2014-15 and 2023-24 based on Gambling Commission figures.

However, the consultation fails to acknowledge the Gambling Commission statistics for 2014-15 are not a true reflection of the market at that point, as they do not include figures from a number of operators based in places like Gibraltar, including major firms, until the introduction of a point of consumption regime for gambling in December 2014.

Dan Waugh of analysts Regulus Partners said: "The problem with this calculation is that it ignores the fact that remote gambling licensing – and therefore taxation – was based on point of supply until November 2014. 

"As a result, seven months of the 2014-15 year were under point of supply and not point of consumption, which means that a large number of operators were not reporting GGY to the Gambling Commission. The 208 per cent growth statistic is therefore based on a false comparison."

Waugh pointed to the commission's statistics for 2015-16, the first to reflect a full year of the point of consumption regime, against which growth was a more modest 63 per cent.

For online sports betting, which would most likely face the largest hike under the government proposals, growth was 36 per cent or a compound annual growth rate of 3.9 per cent.

Waugh added: "The mean annual rate of inflation over the period was around 3.6 per cent so spending on online betting grew just a little ahead of inflation – and was certainly not 'exponential'."

Stella David: "The industry will be putting its point of view"

Entain chief executive Stella David said it was "early days" when asked for her reaction to the consultation on Tuesday.

Answering questions from analysts following the company's trading update, David added: "There's all sorts of legislation that would have to change to enable the harmonisation which means that the earliest we perceive there would be some change, whatever way it would be, would be late 2027, early 2028. 

"There’s a huge amount of things that can happen between now and then and clearly the industry will be putting its point of view through as part of that journey. It’s really early days but nothing is going to happen in the immediate short term."

Entain's shares rose 3.28% on Tuesday to close at 648.80p.

Read these next:

Government warned of 'catastrophic' consequences for racing as it launches gambling tax consultation 

'It will derail racing' - industry sounds stark warning following report Treasury is considering gambling tax hike 

Treasury did not consult DCMS on 'hammer blow' tax move - BGC 

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