The future of high street betting shops in the UK looks exceedingly murky following the news that Paddy Power is to close 57 of its retail outlets.
The Flutter-owned betting giant will lose nearly 10% of its stable of 608 licensed shops in the UK and Ireland and has acted after completing a thorough review of its estate.
The sting in the tail is that Flutter Entertainment has claimed the closures are nothing to do with proposed tax increases that are expected to be imposed in the Labour government’s November budget.
Flutter has estimated that 247 jobs are at risk with this round of closures, but that may not be the end of cost-cutting measures if Chancellor Rachel Reeves does introduce more punitive tax measures next month.
A spokesman for Flutter clarified the position, saying: “While today’s closures are not directly related to the uncertainty surrounding the budget, a higher gambling tax could have a significant impact on jobs and investment across the industry and drive more customers into the arms of unlicensed operators on the illegal black market.”
It is a stark contrast to the fanfare that greeted Paddy Power opening the UK’s first land-based casino sportsbook at London’s Hippodrome at the start of this month.
William Hill, Ladbrokes And Coral Could Follow
There has been a slow rumble around the future of high street betting shops in the UK, heightened by fears the Labour government’s November budget will be raising tax levels for UK operators.
Earlier this week it was revealed that William Hill could close up to 200 shops if tax rises are imposed.
Evoke, the operator of the popular British brand, claimed in an interview with The Sunday Times that it was already looking at damage limitation in response to any potential tax hikes, with shop closures almost inevitable.
Cuts could vary from 120 to 200 from its stable of 1,300 betting shops, with up to 1,500 jobs put at risk.
A spokesperson for Evoke said: “We are mindful of potential tax increases in the forthcoming budget which would impact investment in the UK and drive more customers to the black market.
“As part of our ongoing planning, we are assessing the potential impact of different overall tax scenarios on our UK operations.
“This includes the difficult but necessary consideration for shop closures.”
Stella David, the CEO of Entain, said recently that a tax rise could lead to betting shop closures from its prestigious UK brands Ladbrokes and Coral.
David made it clear that tax hikes in the UK may see a global company such as Entain shift its focus onto more profitable market areas elsewhere.
That could lead to closures of some of its estate of 2,300 retail outlets.
Will Labour’s Gambling Tax Increases Work?
Labour has been looking for a way to raise finance to help tackle “intolerable” child poverty and related problems.
It identified increasing gambling tax revenue as a viable option for providing the extra funds needed, based on the UK’s thriving betting market and comparative tax levels in other countries.
Former prime minister Gordon Brown has proposed raising levies on gambling firms, specifically through general betting duties and machine games duties, introducing measures which the Institute for Public Policy Research has estimated would raise in the region of £3 billion.
Brown called for general betting duty levied on both online and retail bets to be increased from 15% to 25%, excluding wagers on horse racing.
Tax on online slots is presently fixed at 21% while tax on revenue from retail slots stands at 25% and within Brown’s recommendations these would be grouped together at a new single tax rate of 50%.
Naturally no industry would welcome such a proposal with open arms, and warnings that punitive tax hikes could lead to shop closures followed from some of the UK’s biggest operators.
Paddy Power downsizing ahead of November’s budget is an indication that the threat of potential shop closures and job losses across the industry following tax hikes is very real.
That would have a marked effect on the revenues generated through the industry and take away from the very pot that Labour is looking to tap into.
