Abbie MacGregor: The Treasury’s self-defeating crusade against gambling will cost us all | Conservative Home

Abbie MacGregor is a public health and education commentator.

The modern state no longer bothers with persuasion. When governments wish to shape behaviour, they no longer argue, they tax. Taxation today is not simply about raising revenue – increasingly, it is used to signal disapproval, to discourage the ‘irresponsible’ industries, and to quietly re-engineer markets.

Nowhere is this strategy more blatant than in the war against remote betting and gambling, and nowhere is the mantra ‘you tax what you want less of’ more proudly on display.

The introduction of the Point of Consumption model in 2014 marked a watershed moment for the gambling industry. Under this system, gambling operators are taxed not based on where they are located, but where their customers reside. This shift closed a longstanding loophole that allowed offshore firms to serve British consumers without paying British tax. As part of this reform, remote gaming operators were subjected to a 15 per cent Remote Gaming Duty.

In 2019, that duty was raised to 21 per cent for online casino-style products, such as slots and roulette. Sports betting, however, remained under the General Betting Duty at 15 per cent – a decision partly aimed at preserving the financial lifeline between betting firms and British horse racing, which depends heavily on statutory Levy contributions.

Now we have a new Remote Betting and Gaming Duty on the table. The RBGD is the Government’s newly-proposed tax that replaces and consolidates several older gambling taxes (such as the Remote Gaming Duty, General Betting Duty, and Pool Betting Duty) into one unified tax on all online gambling profits. To consolidate the sports betting at 15 per cent and casino products at 21 per cent would almost guarantee an increase in betting duty.

This is latest lurch is based in part on a fundamental misrepresentation of data. In the Treasury’s consultation on unifying remote gaming and betting duties, it is claimed that growth in remote gambling expenditure has been “exponential” and that Gross Gambling Yield grew by 208 per cent between 2014/15 and 2023/24.

However, when you add in the influence of switching to the Point of Consumption model, the growth rate is actually a very modest 36 per cent. In any case, it is questionable why growth in consumption should prompt an increase in the rate of an ad valorem tax – unless that is, one wishes to curb consumption.

And the collateral damage? Nowhere will it be felt more acutely than in horse racing. British racing has long been financially tethered to the betting industry, with a significant share of its funding tied to the Levy, a statutory contribution made by bookmakers. As betting margins are squeezed by rising duties, less money flows into the sport.

Smaller racecourses will suffer first – reduced prize money, cancelled fixtures, dwindling attendance – but eventually the entire ecosystem, from breeders to trainers to stable staff, as well as thousands of jobs within rural economies, will feel the pinch.

And now there’s another twist. The introduction of affordability checks (mandatory financial background tests for anyone placing relatively modest bets) has already driven a sharp decline in legal gambling activity. Customers are walking away in droves, unwilling to hand over payslips and bank statements to place a bet. As a result, turnover has dropped, and with it tax revenue.

The Treasury is now facing a self-inflicted shortfall – and the proposed Remote Betting and Gaming Duty is a transparent attempt to patch that £3bn blackhole.

This isn’t just tax reform; it’s fiscal damage control. Having throttled the market with one policy, the Government is scrambling to recoup the lost income with another. The state creates the wound, then taxes the bandage; a policy allegedly aimed at protecting the vulnerable may well cripple a centuries-old sporting institution that supports tens of thousands of rural jobs.

Of course, the public script is filled with the usual noise: protecting the vulnerable, promoting responsible gambling, ensuring everyone pays their fair share. Yet taxation of any form provides the perfect proxy war: raise costs, shrink margins, and bleed the sector slowly, all without having to argue the case openly. The message is unmissable: comply, shrink, or die.

By increasing taxes on gambling operators, the ministers doing far more than collecting revenue; they’re manipulating the market.

Smaller operators – the ones without war chests or political clout – will collapse, competition will thin, and the only ones left standing will be the biggest firms, the ones most willing to play ball with the Government’s demands – a nice little cartel with just enough revenue to make the tax viable, created not by free market forces but by targeted state suffocation.

The Remote Betting and Gaming Duty will not just punish legal operators. It will hand a golden opportunity to black market gambling sites – many based offshore, unregulated and untaxed – who will be able to offer better value for money if the betting duty increases by a third. They are ready to scoop up disillusioned punters driven away by higher prices, worse odds, and suffocating restrictions.

Already, estimates suggest gamblers in Great Britain bet approximately £2.7bn annually through unlicensed, hidden-market websites, yet successive governments persist in pretending the black market does not exist.

Why? Because acknowledging it would reveal the full failure of their moral crusades. To admit that heavy-handed taxes and regulations fuel black markets is to admit that coercion doesn’t work, that people do not always behave as obedient economic units when confronted with artificial barriers.

The irony is almost tragic. Because when the gambling industry does begin to sputter – when firms fold, when betting volumes fall, when legal operators shrink or disappear – the state will still need its money. And where will it look then? It will renew fresh demands for more tax to make up for the shortfall. It always does.

As the regulated industry declines under the weight of punitive fiscal policy, the very revenue the Government claimed to protect will vanish with it. The Levy will yield less; corporation tax receipts from gambling firms will shrink; jobs will go. Then the Treasury, having driven this decline, will insist on finding that missing money elsewhere through stealth hikes, bracket creep, or new levies disguised as virtue.

What emerges is not just a paternalistic state, but a paternalistic market: one where the freedom to choose is not outlawed, just priced out of reach. Where industries that provide pleasure, risk, and even a sense of tradition – like gambling, racing, drinking – are no longer regulated but reprogrammed, turned into cash cows and scapegoats in equal measure.