A leading UK think tank has called for a tiered approach to gambling taxation, warning that the government’s proposed flat tax on remote betting could worsen gambling harm and destabilize the horse racing industry.

In a new report titled “The Duty to Differentiate,” the Social Market Foundation (SMF) criticizes the government’s plan to merge existing gambling taxes into a single Remote Betting and Gaming Duty (RBGD). According to SMF, such harmonization overlooks the varying degrees of risk and social impact tied to different forms of gambling.

Key Proposals

The report, authored by Dr. James Noyes, makes the case that online casino products, especially slots, are associated with higher levels of addiction and minimal economic contribution compared to land-based or traditional betting formats like horse racing.

The measures, the report claims, could generate an additional £2 billion in annual revenue while promoting safer gambling behavior and sustaining culturally significant industries like horse racing. Reflecting the existing imbalance, SMF recommends a risk-based tax system, including:

  • Increasing the Remote Gaming Duty to 50% for high-risk online games
  • Setting a uniform General Betting Duty of 25% across all betting products
  • Reducing the horse racing betting duty to 5%
  • Raising the Horserace Betting Levy to 20%
  • Exempting small operators from the new tax regime

Current System Labelled “Outdated and Misaligned”

SMF argues the UK’s current gambling tax system encourages harmful play through outdated rules and misaligned incentives. Equal or lower tax rates on harmful, low-employment digital casino products disincentivize healthier gambling alternatives and ignore public health risks.

Instead, the think tank advocates for tax differentiation to reward sectors with greater economic benefit and lower social harm. This is an approach commonly used in other regulated industries, giving it even more credibility in the very dynamic sector. In fact, the report is already expected to influence ongoing parliamentary debates as the government weighs options for modernizing the gambling tax framework.