BGC: MPs Warn Gambling Tax Hikes Risk Boosting Black Market

MPs have warned that proposed increases in gambling taxation could accelerate the shift of customers from the regulated betting and igaming sector to unlicensed operators, following a House of Commons debate on the Finance Bill this week. The legislation will implement a near doubling of online gambling taxes, prompting cross-party concerns that higher duties may ultimately reduce Treasury receipts by weakening the licensed market while strengthening the illegal black market.

During the debate, MPs highlighted analysis suggesting that steeper gambling taxes, including on remote products central to the regulated igaming and online betting ecosystem, could make it harder for licensed operators to compete with offshore and unregulated sites. Industry body the Betting and Gaming Council has argued that the measures announced in the recent Budget will put pressure on both retail and online businesses, with potential job losses, reduced high street investment and a greater incentive for consumers to seek out unregulated alternatives where there are no formal safeguards or responsible gambling tools.

MPs also noted that the Treasury itself forecasts a £500m increase in unlicensed gambling activity and has allocated £26m to counter it, a level of funding some parliamentarians described as insufficient given the expected rise in black market volume. Independent modelling by EY, cited in the debate, indicates that the Remote Gaming Duty increase alone could lead to the loss of almost 15,000 high-tech jobs and see more than £4 billion in stakes migrate to unlicensed operators. A higher sports betting duty is projected to risk a further £2 billion in stakes moving offshore and around 1,750 additional job losses, potentially putting nearly 17,000 jobs at risk overall and shifting more than £6 billion in stakes away from the regulated betting and igaming sector.

Concerns were also raised about knock-on effects for charities and good causes at a time when the statutory levy on gambling is being introduced. MPs warned that if higher taxes weaken the licensed betting and igaming industry, it could create a funding cliff edge for organisations that rely on a sustainable regulated sector for financial support. Contributors to the debate called for an evidence-led approach to gambling taxation that balances revenue objectives with the need to maintain a competitive regulated market, protect employment and limit the scope for illegal operators to gain market share.

James Wild MP, Shadow Exchequer Secretary to the Treasury, warned of the unintended consequences of excessive gambling tax rises, saying: “When taxes rise too far, behaviour can change and the yield can go down. Rather than reducing demand, activity will move to unregulated markets where consumer protections are weaker, fraud risks are higher, and tax revenue is not collected.”

Labour MP for Stoke-on-Trent Central, Gareth Snell also highlighted the risks identified by the Office for Budget Responsibility, stating: “The report from the Office for Budget Responsibility states that there will be a drive towards the black market as a result of these taxation changes. That is much more damaging, will raise much less revenue and, ultimately, will be much more damaging to our economy.”

Caroline Dinenage MP, Chair of the Culture, Media and Sport Committee, said that she has “received very concerning reports that voluntary organisations in particular are facing a funding cliff edge, with delays and a lack of information about the transition to levy payments from the NHS” and called on the Minister to ” act to ensure that no charitable organisation currently operating within the gambling harm prevention sector will have to fold due to delays with levy funding.”

Grainne Hurst, CEO of the Betting and Gaming Council, added: “MPs were right to highlight the real-world consequences of further gambling tax rises which will result in job losses, shop closures and will drive customers towards the unsafe and harmful black market.

“The regulated betting and gaming industry currently supports 109,000 jobs across the country, contributes £4 billion in tax and plays a vital role in funding sport, charities and safer gambling. Undermining the sector with these further tax increases has handed a gift to the growing illegal operators who pay no tax and offer no protections.

“We urge the Government to take an evidence-led approach that supports jobs and growth, protects funding for charities and avoids rewarding the illegal and harmful black market.”