MPs have urged Chancellor Rachel Reeves to ignore “scaremongering” by gambling companies and push ahead with higher taxes on the most harmful products, as pressure mounts on the Treasury to get more out of the £11bn industry ahead of this month’s publication.
In a report released on Thursday, the Treasury Select Committee accused betting firms of hiding their “most insidious” and addictive products behind the guise of traditional, lower-risk activities such as horse racing and seaside amusements. The committee said the chancellor should focus her new duties on slots and online casino games, both of which have seen rapid growth since the pandemic.
The recommendations come as Reeves’ team finalizes the Nov. 26 budget, with Treasury officials still weighing whether to harmonize gambling tax rates or target specific sectors. Industry sources say the chancellor is likely to back a modest increase, expected to raise between £1bn and £1.5bn, but she is facing increasing political pressure to go further.
Calls for a tougher regime echo similar proposals from former prime minister Gordon Brown, who backed a £3bn rise in gambling tariffs to fund the scrapping of the two-child bonus cap, and from influential think tanks such as the Social Market Foundation (SMF) and IPPR.
The MPs’ report also criticized the Betting & Gaming Council (BGC) after its chief executive Grainne Hurst recently denied in evidence that gambling was causing social harm – a moment which committee chair Meg Hillier described as “extraordinary”.
“Sometimes you feel a moment in a room where everyone’s jaw drops,” Hillier said. “Some of us pressed to ask her if she was sure she said that. But she doubled down on her statement.”
The report linked the level of taxation directly to the risk of addiction and called on the Treasury to introduce a more differentiated system that takes into account the different levels of harm from gambling products.
Currently, several obligations apply to different types of gambling. Betting on horse racing and sports is subject to the general betting tax, which is 15%, while casinos pay a gambling tax of 15% to 50%. The remote gaming tax, which covers online casino games, is 21%, and the slot gaming tax – for brick-and-mortar slot machines – is 20% for the most popular machines.
The Treasury has considered simplifying and merging these rates, but the committee said this would be a mistake. Instead, MPs argued for higher taxes on addictive forms of gambling, a stance supported by both the SMF and the IPPR.
Gambling companies have strongly opposed the prospect of new taxes, warning that higher taxes could drive gamblers to unregulated black market sites. The BGC claimed that a tax raid could ultimately reduce Treasury revenue and harm British sport, which relies on the sector’s sponsorship and funding.
The council has also cited an industry-commissioned report from EY which claims drastic tax rises could cost 40,000 jobs and save £3.1bn from the economy. Betting chain Betfred, owned by former Tory donor Fred Done, has warned it could close all of its 1,287 UK stores if taxes rise sharply.
However, the Finance Committee report questioned these claims, citing evidence from the SMF that does not suggest a clear link between higher tariff rates and illegal gambling activities in international markets.
For Reeves, the decision whether to target the gambling sector will be both financial and political. Labor’s manifesto commits to “protecting working people” while ensuring those with the “broadest shoulders” contribute more – a promise that leaves gambling, alcohol and other “sin” industries as potential sources of income in the government’s crosshairs.
With her second budget less than three weeks away, Reeves faces a delicate balancing act: She must raise billions to stabilize public finances without triggering job losses or a backlash from already-stressed industries.
