British Business Tycoon Makes Compelling £5 Billion Argument Over Gambling Tax Proposal

A prominent British billionaire business tycoon has weighed in with some scathing remarks on the state of the UK gambling industry, insisting the government must take a radical approach by raising taxes.

Phones4U founder John Caudwell, a former Tory donor who backed Labour in the last general election, has called on the Chancellor to take firm action to tax online gambling companies more heavily. He claimed that taking this course of action would reduce societal problems linked with betting.

In a recent interview with the Financial Times (FT), Caudwell said: “Online gambling is causing mayhem in society because people just get through on the mobile phone and they’re there all day gambling the family’s money away.

“My whole philosophy is to do what’s best for society and tax those people that are not the best for society. An online gambling tax could raise up to £5 billion.”

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Budget in the spotlight

Chancellor Rachel Reeves is poised to announce the Autumn Budget on November 26. To date, there have been plenty of rumours floating about a raft of tax changes that could be included in the budget given the lukewarm UK economic figures posted over the past few months.

In particular, the UK gambling industry has divided opinions, and it could be a potential battleground in the Budget. Moreover, the Betting and Gaming Council, which represents gambling companies, hasn’t held back. It has described possible betting tax hikes as “economically reckless” and “factually misleading”, rejecting the IPPR (Institute for Policy Research), which has been calling for taxes to be revised.

The Betting and Gaming Council have also voiced concerns that raising the current gambling duty from 15% to 21% would push bettors more towards the black market. Unregulated betting operators don’t contribute tax, and the BGC insists raising taxes would do “more harm than good”.

Protecting gambling in the digital age

The government has been gathering opinions and conducting consultations over potential tax increases. A significant factor in the push for this has been to address the ongoing issue of problem gambling among younger players.

Figures recorded, however, have underlined the continual rise of online gambling. Gross Gambling Yield (GGY) for online gambling now stands at £6.9 billion per year, and it has witnessed 30% growth over the past five years. The way people gamble has fundamentally shifted over the past decade, and remote gambling has become more accessible.

Moreover, the original White Paper that was published in 2023 highlighted the need to modernise the gambling industry. As part of the initiative to protect the industry against gambling-related harm, it was suggested that the tax system needs to be reflective and keep pace with the constant technological changes.

Ripple effect

Protests have been held recently in opposition to prospective gambling tax increases. The horse racing industry was in full force at Westminster last week, as jockeys, trainers, and owners voiced their concerns that hiking taxes would see millions lost in revenue and lead to job losses.

A one-day strike was also held at British racecourses, causing a rearrangement of meets. However, the fear is that the damage could be far-reaching, extending beyond horse racing. The markets didn’t react too well either recently, with Entain and Flutter reporting that around £4 billion had been wiped off in share value over a tax raid on the gambling sector.