Following yesterday's blog post, I bring more news from the dumpster fire of Select Committees. The Treasury Select Committee has published its report on gambling taxes. Its key recommendation is that "Remote Gaming Duty and Machine Gaming Duty (Standard and Higher rates) are always set at a higher rate than Gaming Duty". Since the highest band for land-based casino Gaming Duty is 50%, this implies a rate of at least 51% for fruit machines and online betting which would destroy bingo halls, arcades and much of the bookmaking industry. (Current rates are 15-25%).
Can this really be what they're suggesting? The committee mentions the fact that "when the gross gaming yield at a UK-based casino passes certain thresholds, the Gaming Duty (GD) those casinos face ranges from 15% up to 50% on any additional profit", so they seem to be aware that 50% is the maximum Gaming Duty for land-based gambling.
The committee has fallen for the guff spouted by anti-gambling campaigners at the recent oral evidence sessions (which I wrote about at the time). The report says, for example...
Mr Kenny, the retired co-founder of Paddy Power, confirmed this approach by industry, noting that “[W]hen I campaigned for the gambling industry, I always used to talk about black markets and job losses. We saw it again when the FOBT [Fixed Odds Betting Terminal] legislation was brought in: “Oh, this will close all the shops,” but it didn’t. It is a bit of scaremongering.”
But it wasn't. Britain lost a third of its betting shops after the FOBT stake limits were dropped. No one said it would close all of them, but anti-gambling activists wrongly predicted that it would close only a few of them.
If the committee allows this rewriting of history, it makes you wonder whether the negative consequences of higher taxes will be similarly memory-holed in the future.
The committee cites a fairly recent study to support its belief that the industry is crying wolf.
However, a recent paper in the Harm Reduction Journal noted research arguing that “[ … ] narratives advancing a threat of black-market provision of gambling [are] a form of ‘regulatory resistance’. Regulatory resistance is characterised by industry-led argumentation, often using industry-generated evidence, and arguments that reduced regulation can ‘protect’ the industry from the black market.”
The authors of that paper are actually quoting some British academics who have seen which way the wind is blowing and are treating gambling like a "public health" issue. Their study is one of many that makes the apparently shocking discovery that people will use arguments favourable to their cause when seeking to persuade others (sample line: "Focus on so-called ”black markets” is part of a wider industry
“playbook” whereby companies deploy strategies to resist regulation and
to undermine public health initiatives." Blah, blah, blah.)
The authors of the Harm Reduction Journal are of a similar mind, but they make an important statement that the committee appears to have missed.
Our best attempt to estimate the maximum ‘bearable’ rate of taxation produced an estimate lying around the 30% threshold, which is nearly the double of what was predicated by previous studies (e.g., 15% [13]).
In other words, the authors of the study the committee is citing say that the 'bearable' rate of tax is much lower than the committee is proposing while other studies suggest that gambling taxes may already be too high.
Finally, the committee publish a graph apparently showing no correlation between gaming duty rates and 'black market' gambling. It is not clear what the selection criteria was for this, but there are obviously a lot of countries missing. Moreover, it's not just gaming duty but the overall tax burden that really matters.
The vertical axis stops at 40%, which is below the committee's recommended tax rate, and two countries with higher tax rates are conspicuously absent. France and the Netherlands were both mentioned in the unfathomably influential Social Market Foundation report (which the committee cites) as countries to emulate. As the SMF says, "the Netherlands is changing its remote tax rate from 30.5% to 37.8% in 2025... And France has a remote sports betting rate of 55% – increased to over 59% in 2025."
How are those two nations getting on? The situation in the Netherlands has been such a fiasco that the head of the SMF begged the committee to ignore it. The Dutch now do half their gambling on the black market, according to the Netherlands Gambling Authority. Meanwhile in France...
France’s Illegal Gambling Market Surpasses Regulated Sector as Calls for Reform GrowFrance’s illegal online gambling market has overtaken the regulated sector for the first time, according to new data from the Association française des jeux en ligne (AFJEL). The group estimates 5.4 million players now use unlicensed websites generating about €2 billion in gross gaming revenue (GGR) in 2025 — a 25% increase since 2023.
Great success!
Still, these are only real world case studies from near neighbours who have done more or less exactly what the Treasury Select Committee wants. What could we possibly have to learn from them?
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