Gambling in the United Kingdom is under the microscope once again as MPs, experts, and advocacy groups push for sweeping reforms ahead of the government’s much-anticipated Budget on November 26, 2025. With online gambling booming since the COVID-19 pandemic and fresh data revealing the extent of gambling-related harm, the debate over how to tax the industry—and what to do with the proceeds—has reached fever pitch.
Earlier this month, Culture Secretary Lisa Nandy set the tone in an interview, acknowledging that “gambling brings joy to millions” but warning that “some people in particular” can have their lives ruined by it, as reported by LabourList. The scale of the problem is sobering: the Gambling Commission (GC) revealed that 1.4 million UK adults are now classified in the highest gambling harm group, with millions more considered at risk. The figures underscore the urgency that many MPs and campaigners feel about reforming the sector, especially as the government consults on gambling taxes that could shape the industry’s future.
The Treasury’s current consultation on gambling taxes is expected to play a defining role in the upcoming Budget. Two influential think tanks, the Social Market Foundation (SMF) and the Institute for Public Policy Research (IPPR), have both published submissions calling for higher taxes on gambling. The IPPR, in particular, has proposed using the revenue to lift the controversial two-child benefit cap, a move that could, according to campaigners, lift half a million children out of poverty. The proposal is gaining traction, with nearly a quarter of Labour MPs—101 in total—signing a petition urging Chancellor Rachel Reeves to hike gambling taxes and direct the funds toward tackling child poverty, according to BBC News.
The numbers are significant. The campaigners estimate that a levy on gambling could raise £3 billion, enough to fund the removal of the two-child benefit cap. Former Prime Minister Gordon Brown has lent his support to the campaign, pressing for the cap to be scrapped when the Budget is unveiled. The IPPR suggests that taxes on online gambling should rise from 21% to 50%, slot machines from 20% to 50%, and levies on non-racing bets from 15% to 25%. Brown’s backing has only intensified pressure on the chancellor, who faces a £20 billion gap in tax and spending rules and must consider both tax rises and spending cuts to balance the books.
But the industry is pushing back. The UK’s Betting and Gaming Council (BGC) has warned that further tax hikes would “only harm jobs, investment, and vital funding for sports and tourism.” In a statement quoted by BBC News, a BGC spokesperson argued: “Every time the Treasury squeezes the regulated market, the black market grows stronger. Unregulated operators pay no tax, provide no consumer protections, and threaten UK jobs and revenues.” This argument has been echoed by sector representatives in evidence to the Treasury Select Committee, with the spectre of the black market used to oppose increased taxation and regulation.
However, evidence presented to MPs has cast doubt on the industry’s claims. Stewart Kenny, former co-founder of Paddy Power, highlighted that the UK’s illegal gambling market is primarily made up of under-age gamblers and those who have self-excluded from legal sites. YieldSec, an intelligence platform, reported that more than 600,000 people have self-excluded from legal remote gambling—over 1% of the adult population—indicating the scale of addiction. The report also found that the black market is dominated by casino content, not sports betting, contradicting the narrative that betting restrictions drive people to illegal operators.
An analysis by Landman Economics further criticized the Gambling Commission’s research into the black market, describing it as weak compared to the more robust findings from YieldSec. All this points to a sector that, according to campaigners, extracts billions from the UK economy while contributing to significant social harm and, in some cases, evading UK corporate taxes by operating offshore.
The debate over how best to tax gambling is not just about raising revenue—it’s about targeting the most harmful forms of betting. The Social Market Foundation has argued against merging betting tax rates, a proposal first floated under Jeremy Hunt and now under government consultation for introduction in October 2027. Instead, the SMF suggests higher taxes on sectors that are “more harmful and contribute less to the British economy, such as online slots,” while advocating lower taxes for less harmful sectors like traditional horse racing betting. “Sectors which are less harmful and provide more to the economy such as traditional horse racing betting, should be taxed less,” the SMF stated.
Economists advising the Treasury have weighed in with their own calculations. According to a submission from the Campaign for Fairer Gambling, the optimal tax rate for remote gaming is estimated at over 60%, and over 40% for remote betting, based on the so-called “Laffer curve peak”—the point at which tax revenue is maximized. But given the major social and economic harms linked to gambling addiction, campaigners argue that the tax rate could be justified even higher.
The Treasury Select Committee’s recent hearings have been lively, to say the least. Theo Bertram, representing the SMF, and Carsten Jung, an economics expert for the IPPR, both made the case for higher taxes. In contrast, Grainne Hurst, CEO of the Betting and Gaming Council and former executive at Entain (owners of Ladbrokes and Coral), repeatedly denied any link between gambling and social ills, instead blaming individuals for harm. Her testimony was met with disbelief by committee chair Dame Meg Hillier MP, who said she was “frankly flabbergasted” by Hurst’s response. Notably, neither the BGC nor Entain have published their Treasury submissions for public scrutiny, raising questions about transparency in an industry that has faced its own scandals—HM Treasury has demanded over £600 million from Entain for overseas misconduct, with prosecutions ongoing related to 2024 activities.
The political backdrop is complex. Labour’s 2019 manifesto called for a new Gambling Act, and the 2024 version recognizes gambling as a public health issue. Now, with the party in government and internal pressure mounting, the Chancellor must decide whether to follow through on these commitments by enacting robust tax increases and using the proceeds to address child poverty. Meanwhile, Conservative leader Kemi Badenoch has opposed lifting the benefit cap, arguing that taxpayers “many of whom are struggling to raise their own children or choosing not to have them in the first place” should not have to “fund unlimited child support for others.”
Online gambling’s rapid growth during and after the pandemic has only intensified scrutiny. As LabourList and BBC News both note, MPs are seeking answers and solutions to the social harms caused by gambling, with the Budget deadline looming. The choices made in the coming weeks could reshape the industry and the lives of millions of families across the UK.
As the debate rages, the government faces a pivotal moment: will it seize the chance to tackle gambling harm and child poverty together, or will industry warnings and fiscal caution carry the day?
