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The government is planning a two-tier system for betting on sports other than horseracing, with higher taxes for wagers placed online than in bookmakers.
Three people familiar with the situation said that the chancellor Rachel Reeves would maintain the current 15 per cent tax rate for wagers on sports — such as football, boxing, tennis, darts and golf — when they are placed in bricks-and-mortar bookmakers.
However, online sports betting is set to face a “slight” increase in tax in this month’s Budget, according to two people familiar with the plan. The only exception to this will be horseracing.
Betting on horseracing, both online and in-person, is set to get a complete reprieve after the Treasury had been considering increasing the current 15 per cent tax on it and other sports to be in line with the 21 per cent duty on online games such as casinos.
Currently gambling operators pay 15 per cent duty on wagers on sports, including horseracing. There is no tax paid on bets made at racecourses. There is currently no difference on the duty paid on sports bets where they are placed in betting shops or online.
Online sports betting accounts for a third of the online gambling market. Football is the most popular type of online sports betting, with £1.1bn generated for the industry annually, followed by horse betting at £777.1mn.
The operators also pay a 21 per cent duty on online games — known as remote gaming — and a levy of 20 per cent of profits on physical machines, such as fixed-odds betting terminals (FOBTs).
Reeves is set to raise the levy on physical machines and online games in the Budget, said two of the people familiar with the situation. The cash generated by a tax on wider gambling is all the more important to Treasury coffers after the chancellor dropped plans to raise income tax.
Machine gambling has been called “addictive” and “higher-risk” by anti-gambling campaigners, who have urged for the levy on it to be increased from 20 to 50 per cent.
Reeves had been urged by Gordon Brown, the former prime minister, to include all forms of sports betting and horseracing in the higher rate of tax to raise an estimated £3.2bn and fund the scrapping of the two-child benefit cap.
In September Reeves said that she believed there was “a case for gambling firms paying more”.
The betting industry, led by the British Horseracing Association, has furiously lobbied against such a move, warning it would lead to thousands of jobs being lost as well as risk an industry that contributes £4.1bn to the economy and generates £300mn in annual tax revenue. Betting firms have warned that higher tax on any part of the industry will lead to less funding to support horseracing.
The move to protect bricks-and-mortar bookmakers comes after Betfred, owned by Britain’s second-biggest taxpayers, the Done family, warned last month that it would close its entire estate of nearly 1,300 shops if Reeves pressed ahead with an increase in gambling taxes.
A Treasury spokesperson declined to comment on wider sports betting being excluded from higher levels of tax, but said: “Horseracing is part of the cultural fabric of the country, that’s why it’s the only sector that benefits from a government-mandated levy, while betting at the races gets a 100 per cent tax break — which we have no plans to change.”
Additional reporting by Stephanie Stacey
