Posted on: October 14, 2024, 07:01h. 

Last updated on: October 14, 2024, 07:01h.

Shares of UK-based betting companies took a big hit in early trading Monday as investors reacted to reports that the British government was planning a “tax raid” on the industry.

Investors appear to have been spooked by a story published in The Guardian on Friday which suggested the country’s new Labour Party administration was contemplating raising taxes on the industry to plug a £22 billion (US$28.7 billion) hole in the nation’s finances.

While Treasury officials have yet to make a decision on the issue, they “appeared receptive” to the idea of extracting an extra £900 million (US$1.2 billion) to £3 billion (US$3.9 billion) from the industry, according to The Guardian.

Last year, the industry generated £3.4 billion (US$4.4 billion) for UK tax coffers, representing around about 0.3% of total government receipts.

It’s possible that the mulled tax hike could be made a reality in Labour’s first budget, which is expected this month, sources told the newspaper.

Evoke Worst Hit

Evoke [LON: EVOK], owner of William Hill in the UK and 888, took the biggest hit. Its shares tumbled 15% in early trading on the LSE.

Entain [LON: ENT], which jointly owns BetMGM in the US with MGM Resorts, was close behind, losing 14%. The company owns UK heritage betting brands Ladbrokes and Coral, along with bwin, PartyPoker, and a host of regional European brands.

Shares in FanDuel owner Flutter Entertainment [LON: FLTR], which also owns brands including Betfair and Paddy Power, slipped 7%, as did those of Britain’s largest land-based casino operator, Rank Group [LON: RNK].

The previous Conservative Party administration tightened gambling regulations with a raft of measures that are being introduced to the industry incrementally. These include affordability checks for players and stake limits for online slots.

The industry hoped that while Labour would continue with the implementation of these reforms, there would be no further government-imposed restraints on the gambling sector.

Doubling Taxes?

However, the Treasury is currently examining a report by the left-leaning thinktank, Institute for Public Policy Research (IPPR), according to The Guardian. The research estimates the government could raise £2.9 billion (US$3.8 billion) next year by doubling taxes on “higher harm” products, such as slots and casino games.

One industry source told The Guardian: “The anti-gambling lobby has donated at least £1 million (US$1.3 million) to Labour over the past 18 months, and you have to wonder what they expect to get in return for that.”