In the latest hand of policy poker, UK officials are reportedly weighing hiking taxes on gambling, which sent shares in the industry tumbling like dice at a craps table on Monday. Meanwhile, gambling hub Macau plans to cash out some of its chips as it continues to wean itself off the industry.
A Budget Getting Out of Hand
The UK’s new Labour government, little more than three months into office, has said for weeks that it was left with a £22 billion ($28.7 billion) shortfall in public finances covered up by its predecessors. To close the gap, Chancellor Rachel Reeves has already begun making difficult decisions — most notably a controversial move to cut off 10 million retirees from a tax-free payment to help with winter heating costs.
The Guardian reported on Friday that hiking gambling taxes — which the Institute for Public Policy Research (IPPR) estimates could raise £2.9 billion next year and £3.4 billion by 2030 — is also being considered. The think tank has argued for doubling the duty on brick-and-mortar betting shops to 30% and hiking the duty on online casino gaming to 50% from 21%. Neighboring France already has a 55% tax on online bookmakers, and may soon go higher. The news hit markets Monday like a bad Vegas hangover:
- Entain, the Isle of Man company that owns UK betting shop Ladbrokes Coral, fell 8% on the London Stock Exchange. Ireland-headquartered Flutter, which owns Paddy Power and Sky Betting & Gaming, fell 6% in London.
- Roberta Ciaccia, an analyst at Investec, told the Financial Times that the IPPR proposal the UK is reportedly considering would hit the crackpot rather than the jackpot. She said it is “not realistic at all, as it will not allow any operator to be profitable,” and noted the profit margins of betting firms in the UK top out at 25% for online gambling and 20% from physical locations.
Hedging on Betting: While the UK is thinking about tapping its gambling market, Macau wants to cash in some chips for good. Sam Hou Fai, who was elected the next leader of the Chinese autonomous region in an uncontested election Sunday, plans to chip away at the gambling industry’s former stronghold on the local economy: It fell to 36% of GDP last year, down from over 50% in 2019. He reportedly has Beijing’s backing for a plan to invest in tourism, finance, commerce, and high tech — ah, tech, definitely not a gambler’s industry.