U.K. Bookmakers' Committee Pleads for a Tax Break

On January 28, the United Kingdom's Bookmakers' Committee of the Horseracing Betting Levy Board issued an urgent call for reduction of the U.K. betting duty.. The Committee, which represents the entire U.K. bookmaking industry, recommends lowering the duty to 3 percent from the current rate of 6.75 percent and has sent the Treasury reports commissioned from Europe Economics and independent consultancies MMD Ltd.

"The gambling industry is changing faster and more radically than ever before," Committee Chairman Warwick Bartlett said. "Already, all the major U.K. bookmakers have set up off-shore operations, and new entrants to the market are launching on virtually a daily basis."

"The government has a real opportunity to build on the success of British bookmaking. A reduction in duty to 3 percent could make us a world leader in e-commerce gambling and more than double current annual turnover," he added. "The alternative is to sit back and watch the domestic industry wither on the vine."

The MMD report suggests that a 3 percent rate of duty could generate between £5 billion and £15 billion of additional turnover for UK Bookmakers. In turn, conservative estimates indicate that the tax cut would increase government revenues more than £230 million annually. In 1998, the General Betting Duty generated £479 million.

The Committee also pointed out that:

offshore operators' ability to offer lower tax duty levels for phone and Internet punters is the greatest threat to the industry since the legalization of off-course betting nearly 40 years ago;
betting turnover in the U.K. will be lost to offshore and Internet betting if the duty remains 6.75 percent;
these losses of turnover for U.K. operators will adversely affect government and horseracing revenues;
the losses also mean that ewer jobs in the betting industr would be available, which would lead to an increase of illegal betting (the Committee estimated that illegal bets in the U.K. total about £1 billion annually);
it would be nearly impossible to prevent U.K. punters from using bookmakers in tax-free jurisdictions.

The Reports

The Europe Economics report suggests that U.K. bookmakers and the government would see an increase in turnover if the betting duty were to be dropped. They base their findings on a study of the Irish betting industry, which saw its betting duty decrease from 10 percent to 5 percent last July. The study suggests that a 28 percent to 38 percent increase in turnover since July could be attributed to the tax cut.

The MMD report takes a broader look at the betting industry around the world and examines how U.K. bookmakers fit in. The report suggests, among other things, that U.K. bookmakers would be well situated to penetrate new markets around the world if it weren't hampered by a high betting duty. It also suggests that, with a lowered tax rate, an international market for U.K. bookmakers could hit £65 billion by 2001.