• Former UK Prime Minister Gordon Brown has called for significant tax increases on the gambling industry, including a 50% tax on online slots, to fund child poverty initiatives.
• The proposal, supported by the think tank IPPR, comes as the UK government faces a reported £41bn funding gap, making the gambling sector an attractive target for tax rises.
• Industry body the Betting and Gaming Council (BGC) has warned that such hikes would be counterproductive, potentially driving a third of customers to the unregulated black market.
• The debate is intensified by real-world data from other European markets, such as the Netherlands, where a recent tax increase has reportedly led to a decline in state gambling revenues.
• These proposals run contrary to the UK Treasury’s current plans to unify gambling duties, creating further uncertainty for the industry’s long-term fiscal landscape.

The UK gambling industry is facing a renewed and high-profile political threat after former Prime Minister Gordon Brown urged the government to “turbocharge” its tax take from the sector to fund social programmes.

In a widely publicised op-ed, Brown, who led the UK from 2007 to 2011, threw his weight behind proposals from the Institute for Public Policy Research (IPPR) think tank. These include raising the tax on online slots from its current 21% to 50%, and increasing the general betting duty from 15% to 25%. Brown argued that the industry should be “properly” taxed on its earnings to help combat what he described as “Dickensian levels” of child poverty in the UK.

The intervention carries significant political weight and comes at a time when the government, led by Chancellor Rachel Reeves, is under pressure to find new revenue streams to cover a reported £41 billion public funding gap.

The Industry’s Warning: The Black Market Risk

The UK’s regulated industry has responded with stark warnings about the potential consequences of such drastic tax hikes. The Betting and Gaming Council (BGC), the trade body for UK operators, has consistently argued that punitive tax rates make the legal market uncompetitive and inadvertently strengthen the unregulated black market.

The BGC has previously estimated that a third of customers would migrate to illicit sites if tax increases forced licensed operators to withdraw promotions and reduce value. “Punters have been loud and clear, hit them with further taxes and they will walk away from the legal, regulated market, straight to the black market,” warned BGC CEO Grainne Hurst. “A spiral of decline which raises less tax, and undermines player protections… Balanced regulations and a stable tax regime are the best defence against the black market.”

Cautionary Tales from Europe

The industry’s concerns are supported by recent evidence from other European jurisdictions that have implemented significant tax increases. In the Netherlands, a recent hike in the gambling tax rate to 34.2% has been publicly criticised by the country’s own regulator, the KSA. The authority confirmed that the increase has led to a decline in tax revenue from both the online and land-based sectors as the legal market is squeezed.

Similarly, Germany has seen its gambling tax revenue stall following major regulatory reforms that have made the legal market less competitive. These real-world examples suggest that the additional £3 billion in revenue projected by supporters of the UK tax hike may not materialise if players abandon the regulated system. The UK government now faces a critical policy choice between heeding these warnings or pursuing a high-tax strategy that risks destabilising the licensed market.