Increased Gambling Taxes Can Solve Child Poverty, Says Former UK PM Gordon Brown

Photo by Lawrence Krowdeed on Unsplash

Former UK Prime Minister Gordon Brown has endorsed proposals by the Institute for Public Policy Research (IPPR) to significantly raise gambling taxes in order to combat child poverty.

Brown commented: “There are many reasons why the highly profitable betting and gaming industry should pay a fairer share towards the cost of UK’s unmet needs. Most important is that it would enable half a million children to be lifted out of poverty in this autumn’s budget, and so help to build our country for the next generation.”

Reported by the Independent, Brown’s comments come in the back of IPPR research, which recommends:

• Raising the online casino tax from 21% to 50%
• Increasing tax on slot and gaming machines from 20% to 50%
• Hiking sports betting tax from 15% to 25%

The IPPR’s research suggests that these reforms could generate an additional £3.2 billion, which could be used to provide additional benefits to families. Currently, the UK has a policy to restrict child benefit to two children, which campaigners for tackling child poverty have argued must be scrapped.

Henry Parkes, principal economist and head of quantitative research at IPPR, said: “The gambling industry is highly profitable, yet is exempt from paying VAT and often pays no corporation tax, with many online firms based offshore. It is also inescapable that gambling causes serious harm, especially in its most high-stakes forms.

“Set against a context of stark and rising levels of child poverty, it only feels fair to ask this industry to contribute a little more.”

Increased Taxes Will Drive Bettors Offshore

As Parkes notes, many UK gambling companies are based offshore for tax purposes, but are held accountable to UK gambling laws set out by the UK Gambling Commission.

A spokesperson for the Betting and Gaming Council (BGC) said the increased taxes would “risk driving huge numbers to the growing, unsafe, unregulated gambling black market, which doesn’t protect consumers and contributes zero tax”.

It was revealed this week that an increase in gambling taxes in the Netherlands resulted in lower tax revenue being collected in the country. Prior to the tax increases, a trade body of gambling companies warned the state regulator that it would lead to reduced revenue and drive gamblers to unregulated offshore sites.

UK Already Losing Tax Revenue to Unregulated Sites

A survey commissioned by the BGC last year estimated that UK players wager £2.7 billion annually on online, unregulated gambling platforms. As a result, it was reported that the UK government lost £335 million in tax revenue.

The amount wagered at unlicensed platforms is relatively small, at 2% of the £128 billion wagered annually with licensed operators. Still, if the costs of betting at regulated sites go up, users will find alternatives.

In the U.S., the Sports Betting Alliance (SBA), comprising the leading sportsbooks in the country, has similarly warned states that increased taxes will lead to players gambling on unlicensed platforms. SBA members DraftKings, FanDuel, and Fanatics all responded to a tax on bets placed in Illinois by announcing they would pass the cost on to the users.

Rather than paying to place a bet on a licensed platform, many players search online for alternative betting sites that don’t require them to pay taxes and can also provide better odds, promotions, and bonuses.

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