A Treasury Committee hearing has heightened concerns over planned tax rises in the UK, as the gambling industry’s attempts to warn about the risks of black market growth have seemingly fallen on deaf ears.
Betting and Gaming Council (BGC) tax expert Stephen Hodgson and Chief Executive Grainne Hurst faced criticism from members of the Select Committee, who made little effort to hide their negative stance towards the gambling sector.
In the first part of the session, former Paddy Power CEO and co-founder Stewart Kenny accused the industry of “scaremongering”. He noted that after tax increases were introduced in Ireland in 2019, state revenues nearly doubled and the black market did not grow. Hodgson responded that he “could not believe what he was hearing”, suggesting that Kenny had omitted the increasing pressures on the retail sector in Ireland, which resulted in the closure of more than 120 betting shops.
Dame Meg Hillier then sharply noted that COVID likely played a significant role in these closures.
Hodgson acknowledged that this may be true, but stressed that operating conditions for bookmakers in Ireland remain extremely challenging. He added that the betting environments in Ireland and the UK differ substantially, making direct comparison inappropriate.
Dame Siobhain McDonagh criticised the retail betting sector, claiming that betting shops had transformed from social venues into hubs for alcohol and drug-related issues, raising concerns among local residents. She argued that operators in her constituency were unwilling to recognise the problem. Hurst attempted to defend retail betting, leading to a tense exchange and her agreeing to visit betting shops in McDonagh’s Mitcham constituency.
Hillier then accused the industry of “undermining its own shops by making them unwelcoming”. Hurst countered that many employees could find easier jobs elsewhere but choose to stay in betting shops because they are passionate about their work. She also emphasised that at a time when UK high streets are struggling for footfall and in desperate need of economic recovery, 90% of betting shop customers go on to spend money in other nearby shops. This, she said, should be taken into account—particularly as tax pressure threatens to cripple the retail sector.
Once the topic of high street harm had been exhausted, MPs turned to taxation – specifically whether different gambling products should be subject to different tax rates.
Hurst challenged the logic of this idea, but as pressure from MPs increased, she became visibly weary of the questioning, which appeared aimed at catching her out. Her insistence on saying nothing negative about the regulated sector ultimately backfired, making her arguments repetitive and increasingly frustrating for the committee.
Hurst repeatedly denied that gambling causes social harm. She again highlighted that only 0.4% of the population has a gambling problem, a statistic that angered the Committee, who accused her of downplaying the scale of harm.
Hurst maintained that people engage with gambling in different ways and insisted it is wrong to label the industry itself as a cause of social harm.
A statement from Hillier, underpinned the bewildered reaction of the committee: “While I accept parts of the gambling industry make an economic and cultural contribution to the UK, I am frankly flabbergasted that representatives from the betting sector could not accept that certain forms of gambling, such as highly addictive online casino games, cause social harm for some people. I don’t believe that is a defensible position.”
Carsten Jung, who leads economic research at the IPPR think tank, acknowledged that for the “most harmful forms of gambling”, tax increases alone will not stop a significant number of players. He expressed scepticism about comparisons with the Dutch market, arguing that operators’ responses to tax rises can cause the negative consequences observed in the Netherlands, often cited by the industry.
The industry widely argues that higher taxes in the Netherlands drove players away, reduced tax revenues and pushed consumers towards the black market. Jung, however, believes operators share the blame, claiming they began “squeezing revenues from alternative sources” and shortening odds, which deterred players.
Dr Theo Bertram of the Social Market Foundation added that the “notoriously permissive culture” in the Netherlands contributed to the growth of the black market. He noted that in the Netherlands, tax measures were introduced as part of a broader regulatory reform, while in the UK they are being implemented as a single measure. He dismissed the Dutch example as “unique”, instead pointing to strong channelisation levels in Estonia and the Czech Republic.
Jung and Bertram agreed that tax increases can be compatible with rising operator revenues. Bertram also stressed that slots are far more harmful than other gambling products. Hurst disputed this, arguing that harm stems not from a product itself but from an individual’s interaction with it, noting that problem gamblers typically use multiple gambling verticals.
Hurst and Hodgson were then forced to distance themselves from the Turkish bribery scandal linked to Entain in the period before its 2020 rebrand from GVC Holdings. From this moment, tensions between the BGC and the Committee markedly escalated.
Hurst and Hodgson attempted to refocus attention on black market risks and the direct connection between tax pressure and its growth. Hodgson referenced studies comparing several US states, but the Committee coldly rejected the findings, pointing out that the research was funded by the BGC. Hurst was then accused of being “disingenuous” for refusing to acknowledge varying risk levels among different customer groups.
Hurst defended the industry, highlighting progress in harm markers, but the Committee dismissed this as insufficient and poorly implemented in practice. The BGC chief added that the industry actively blocks problem gamblers and that “both the retail and online sectors maintain the highest possible standards” of consumer protection.
Liberal Democrat MP Bobby Dean pushed for agreement on basic harm statistics and the share of revenues generated from problem gamblers. Hurst warned of the ease of accessing non-GamStop casinos and urged MPs to search for illegal sites themselves. Dean rejected the Dutch comparison as a “weak argument”, again citing Estonia and the Czech Republic.
Hurst remained firm: “we simply should not be pushing players towards the black market.” She added that the black market in the UK is growing as tax revenues from the regulated sector decline and regulation tightens as a result of the White Paper Review.
It now appears the industry may have “cried wolf”: black market warnings are being consciously dismissed in Westminster, and any parallels with the Netherlands are rejected as unfounded.
For now, the outcome of the hearing can be seen as a setback for the sector, which has suffered another PR defeat – and the “Red Box No. 11” is increasingly likely to push retail betting into a period of instability while giving the black market room to reach new heights.
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