UK Gambling Tax Debate Ignites as Paddy Power Co-Founder Calls Black Market Threat 'Exaggerated'

• The debate over potential UK gambling tax hikes has intensified, with reports that the Chancellor is considering classing gambling as a “sin tax.”
• The industry’s primary argument against tax rises has been undermined by Paddy Power co-founder Stewart Kenny, who has called the black market threat “way exaggerated.”
• In response, senior executives at major operators like Entain and evoke have warned that tax hikes will force them to offer worse value to customers, directly fuelling the black market.
• Operators are pointing to the Netherlands as a real-world example, where a recent tax increase has reportedly led to a 25% fall in state gambling revenues.
• The dispute comes as British Horseracing prepares to strike on 10 September in protest, an action that now has the backing of the Conservative shadow sport minister.

The fierce debate over the future of UK gambling taxation has taken a dramatic turn, after Stewart Kenny, a co-founder of industry giant Paddy Power, publicly dismissed the sector’s long-standing warnings about the black market as “way exaggerated.”

Kenny, who has become a vocal critic of the industry since his departure in 2016, made the explosive claim amid growing political pressure for tax increases. “I’m embarrassed to admit this… we knew it was way exaggerated but it is the perfect way of saying ‘the government will lose money’ - but in fact it won’t,” he stated. His comments provide powerful ammunition to politicians and campaigners who are pushing for the industry to pay more.

Government Reportedly Eyes ‘Sin Tax’ Treatment

Kenny’s intervention comes at a critical time. Recent reports in the Daily Mirror suggest that the Chancellor of the Exchequer, Rachel Reeves, is actively considering bringing gambling into the UK’s “sin tax” category, alongside alcohol and tobacco. This move would signal a significant hardening of the government’s fiscal stance towards the sector.

Operators Point to a European Precedent

In response to the mounting pressure, senior executives at the UK’s largest operators have pushed back hard, pointing to real-world evidence from Europe to counter Kenny’s claims. Speaking on recent earnings calls, the CFOs of both Entain and evoke warned that significant tax rises will have predictable and damaging consequences.

Entain CFO Rob Wood explained that tax hikes are inevitably passed on to consumers through worse odds and fewer promotions. “The consequence of that is black market operators, who don’t pay any tax or have any player protection, pick up customers,” he warned. Evoke CFO Sean Wilkins was more direct, referencing the recent turmoil in the Netherlands: “Increased tax beyond a certain point we know leads to black market growth, which leads to less tax take and zero player protection… This is not speculation, this is evidenced in the Netherlands.”

Recent data from the Dutch regulator, the KSA, appears to support this view, detailing that overall tax intake in H1 2025 had fallen by 25% following a tax increase.

A Sector United in Opposition

Despite Kenny’s comments, the active industry and its allies remain united in their opposition to the proposed hikes. The British Horseracing Authority is proceeding with its unprecedented strike action on 10 September, a move that has now received backing from the Conservative shadow sport minister, Louie French.

“The unprecedented move… highlights the urgency for the Government to change course,” French said. “The Government’s latest tax proposals will further fuel the black market, hurting jobs, punters and racing in the process.”