When the United Kingdom government announced in November 2024 a tax hike on online gambling during the Autumn Budget, the public debate focused almost exclusively on the domestic market. As the weeks passed, however, concern began to grow about its possible effects on Gibraltar, an overseas territory whose economy depends heavily on the gambling sector.
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The issue formally reached Parliament during the third reading of the Finance Bill in the House of Commons, when Labour MP Gareth Snell, representing Stoke-on-Trent Central, proposed an amendment with the aim of having the government evaluate the economic impact of the tax hikes on Gibraltar before April 1, 2027.
What the amendment to the Finance Bill proposes
The amendment presented by Snell requested the British executive to publish a specific impact report on clauses 83 and 84 of the bill, which provide for the increase of the remote gaming duty to 40% and the remote betting duty to 25%. The deadline required for publication was April 1, 2027.
The MP justified his proposal with a specific argument: one-third of Gibraltar’s tax revenue comes from the gambling sector.
Snell also highlighted that Gibraltar collects its own taxes on operators’ gross turnover, not on profits. This means that a drop in British players’ activity or a change in their betting patterns could drastically reduce the territory’s tax base.
Gibraltar: an economy built on gambling
The British territory of Gibraltar is home to some 3,500 people directly employed by the gambling sector, according to data cited during the parliamentary debate.
Since the tax hikes became known, Gibraltar’s Minister for Justice, Trade and Industry, Nigel Feetham, was one of the first to publicly warn about the consequences. On December 1, 2024, he stated that the increase in gambling tax in the UK works as “a tax on revenue, not on profits,” and that internal models suggest the effective tax rate for operators could climb to between 80% and 100%.
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The black market argument and its parliamentary rejection
One of the aspects of the amendment also involved an assessment of the black market: Snell asked the government to analyze whether the tax increase could push more players toward unlicensed platforms, thereby reducing the tax base and creating additional risks for consumers.
However, this concern was dismissed by other MPs. Alex Ballinger, representing Halesowen, described the black market argument as a recurring tactic of regulated industries to resist tax changes. “In the gambling sector, the threat of the black market is exaggerated. The regulated market is dominant and, in recent years, there have been many tax changes that have not increased the size of the black market,” he stated.
Ballinger supported his position by citing a 2021 UK Gambling Commission study, which found that only a very small proportion of British players used unlicensed websites to place their bets.
A debate that does not end with the bill
Although the amendment was rejected and the Finance Bill moved forward without modifications on this point, the parliamentary debate left an unanswered question: can the UK increase online gambling taxes without compromising the economic stability of a territory that depends on that same sector to fund one-third of its public budget?
The coming weeks, with the entry into force of the new tax rates and the start of controls by the Gambling Commission, will be key to beginning to measure the real scope of a measure that, according to its critics, could have unforeseen consequences both inside and outside the United Kingdom.
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