Tax increases on betting could reduce the UK economy by £3,1 billion and eliminate 40 jobs, reveals an EY study.

The UK Betting and Gaming Council (BGC) has released a study by consultancy firm EY indicating a possible reduction of up to £3,1 billion in the economic contribution of the gambling sector. The research, published on Tuesday (28), assesses the impact of proposed tax increases that Chancellor Rachel Reeves may announce in next month's autumn budget.

The analysis examined the potential consequences of recommendations made by two British research institutes – the Social Market Foundation (SMF) and the Institute for Public Policy Research (IPPR). These organizations advocate for higher taxation on gambling as a strategy to combat child poverty, a proposal supported by more than 100 politicians from the Labour Party and the entire Liberal Democrat Party.

Currently, betting companies in the United Kingdom pay taxes at rates of 21% for online games such as bingo, 15% for sports betting, and 20% for slot games. The proposals suggest raising the rate to 50% for online games, called the Remote Betting Tax, and 25% for sports betting, called the General Betting Tax.

According to the EY study, implementing the IPPR recommendations would result in the loss of 40.000 jobs, divert £8,4 billion in bets to the black market, and eliminate £3,1 billion from the sector's Gross Value Added (GVA). The SMF proposals would have a smaller impact: 30.200 jobs lost, £8,1 billion in bets diverted to the black market, and a £2,5 billion reduction in the economy's GVA.

The BGC claims its members contribute £6,8 billion to the British economy, pay £4 billion in taxes, and support over 109.000 jobs nationwide. These jobs include thousands of highly skilled technology positions in cities such as Stoke-on-Trent, Manchester, Leeds, Nottingham, Sunderland, and Warrington.

The consequences of the tax increases would primarily affect physical betting operations. Betfred claims that the increases could force the closure of all 1.300 of its betting shops, putting nearly 7.000 retail jobs at risk. Flutter announced it will close 47 Paddy Power betting shops regardless of any tax increases, and Evoke is reportedly considering closing its William Hill betting shops.

“It is now clear that these new tax increases are a direct threat to British jobs and economic growth. The numbers speak for themselves: tens of thousands of jobs lost, billions diverted to the black market and a potential £3 billion impact on the economy,” said the BGC. “Tax attacks like those proposed would mean fewer betting shops, casinos and bingo halls, fewer jobs and a huge boost to the growing and unsafe black market for gambling, without raising anywhere near the tax revenue claimed.”

The CEO of the BGC, [Name], defended maintaining the current tax regime: “Balanced regulations and a stable tax regime ensure a growing regulated sector. But these proposals would achieve the opposite and undermine the very consumer protections that keep people safe, pushing consumers into the unregulated black market where there are no safeguards, no tax revenue, no jobs, and no support for the sports we all love. The UK betting and gaming sector is a world leader – employing thousands of people, paying billions in taxes and investing in British sport. The choice is clear: support a successful, sustainable and regulated British industry – or risk losing jobs, investment and growth.”

Brazil is following the same path.

In Brazil, a similar situation is occurring, where the Ministry of Finance and parliamentarians have mistakenly debated and defended proposals to readjust the taxation on sports betting and online games (known as bets). The stated objective is to increase federal government revenue, with proposals that include raising the tax rate on company revenue (Gross Gaming Revenue – GGR) from 12% to 18%, and even more radical suggestions to double the tax to 24%.

Similar concerns are raised in Brazil, where the online betting sector has warned of the risks of an excessive increase in the tax burden. According to the industry, this could lead to a drop in revenue and migration to the illegal market. An aggravating factor in the Brazilian case is that, in addition to the 12% Gaming tax on GGR, companies also face other taxes such as IRPJ, PIS, Cofins, CSLL and ISS, as well as the inspection fee.

In the Brazilian context, the discussion about taxation is occurring shortly after the regulation of the betting market, which came into effect in January 2025. In addition to proposals to increase tax rates, there are also discussions about retroactive taxation of companies that operated in Brazil before regulation, within the so-called Zero Litigation Project. "The pursuit of tax balance is legitimate, but turning sports betting into the 'golden goose' of revenue collection could compromise a newly regulated and growing sector, generating legal uncertainty and discouraging investment," commented lawyer Milton Jordão.