When James Bond played a straight flush against Le Chiffre in Casino Royale, he looked cool. Very cool.
The odds of such a hand? One in 72,192, or a probability of just 0.00139 per cent. But this tuxedoclad, odds-defying image of gambling is misleading. In the UK, gambling is more likely to take place on a smartphone than in a glamorous Monte Carlo casino. The three most popular forms of gambling in Britain are online: online casinos, online slots, and online sports betting. And unlike in Bond’s world, where villains are brought to justice, here the real winners are the gambling companies.
As the saying goes, “the house always wins” – with players and society left to pick up the tab.
The most socio-economically deprived and disadvantaged groups in the UK have the highest levels of “harmful gambling” – meaning gambling that results in financial distress or negative impacts on health or social connections. Gambling for some may be fun, but for others it’s a serious addiction.
Despite these harms, we have an unusually low tax rate on the industry. Britain’s Remote Gaming Duty – effectively the tax on online casino profits – stands at just 21 per cent. This is far lower than many other countries: in the Netherlands it’s 40 per cent; in Austria, 54 per cent; and even Delaware, a tiny US state, has set its rate at 57 per cent.
We already recognise the need to tax harmful industries like tobacco and alcohol, both to generate revenue and to offset their social costs. A pint of beer or a pack of cigarettes are taxed heavily: a third of the cost of a pint and three quarters of the cost of a pack of cigarettes is tax. Yet online gambling – despite its well-documented links to addiction and financial ruin – remains comparatively undertaxed.
It is unsurprising that the sector is booming. Since 2015, remote gaming yields have grown by 40 per cent in real terms, extracting ever more money from British households while contributing relatively little to the public pot in return. Despite record-breaking profits, online gambling raised just over £1bn for the Treasury in 2023-24. That’s a drop in the ocean compared to what other industries pay.
Worse still, some of these companies avoid UK taxes altogether by basing themselves offshore. Many are headquartered in Gibraltar or the Isle of Man, taking full advantage of loopholes that allow them to dodge UK corporation tax. Meanwhile, they enjoy further perks at home, including a VAT exemption on gambling. The industry extracts billions from British pockets each year, yet it benefits from tax breaks that even struggling small businesses can only dream of.
The time has come to correct this injustice. Raising Remote Gaming Duty by just one percentage point would generate an extra £50m annually. Increasing it to 41 per cent could bring in £1bn a year. Meanwhile, a unified online gambling tax – applying the same rates across online betting, slots and casinos – could raise an additional £700m if set at 41 per cent, while bringing rates of “Machine Game Duty” rates (payable on the profits from in-person slot machines and the like) to the same level would raise a further £700m. Together these changes could bring in up to £2.4bn a year.
Opponents of higher gambling levies argue that such taxes would push people towards unregulated black-market betting sites. But there’s no real evidence for this. When the UK modestly increased gambling taxes in 2019, revenues rose – without any significant shift in betting patterns or an exodus to illegal operators.
The government has set itself ambitious goals: growing the economy, bringing down bills, and restoring public services. To do all this, it needs to raise revenue – and quickly. Taxing online gambling fairly is a no-brainer, and the funds should be directly reinvested in tackling poverty. Collectively, these reforms could generate enough revenue to scrap the two-child limit and lift hundreds of thousands of children out of poverty. The government has a simple choice: continue allowing offshore giants to extract wealth with minimal taxation while harming some of the most vulnerable people in our society. Or take a stand, and tax online gambling like we do tobacco and alcohol – putting this revenue back into the communities that have suffered most from the consequences of the gambling epidemic.
Right now, the gambling industry is benefiting from the luck of the draw. But a gambling levy can be the ace up the government’s sleeve in tackling the next generation of poverty and deprivation.
This article first appeared in our Spotlight on Child Poverty supplement, of 23 May 2025, guest edited by Gordon Brown.
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