Flutter MD warns of black market risk as remote gaming tax hike bites
The financial impact of the UK’s remote gaming tax increase is expected to drive market consolidation and presents a growing risk of customers moving to the black market, according to Flutter’s Richard Clarke.
- The UK’s remote gaming tax increase to 40% is forecast to have a £500 million impact on Flutter from next year.
- Market pressures are contributing to job cuts at operators like Entain and predictions that tier-one firms could control 80% of the market.
- Concerns over the black market are underscored by research showing an unlicensed site accepting bets from a fictional 213-year-old.
The managing director for Flutter’s Paddy Power and Betfair brands has highlighted the significant financial strain and growing black market threat posed by the UK’s recent remote gaming tax increase. Speaking at the SBC Summit in Lisbon, Richard Clarke addressed the consequences of the tax rate rising from 21% to 40% on 1 April.
We are expecting a £500 million impact from next year due to the tax changes.
The increased tax burden is already being felt across the industry, coinciding with significant operational changes at major firms. Entain Plc recently announced plans to reduce its customer care workforce by approximately 400 positions, which constitutes about 20% of its support staff across the UK, Gibraltar, Ireland, and mainland Europe. This follows a previous round of 500 job cuts in the company’s corporate, product, and technology divisions.
Panellists at the event suggested these financial pressures are likely to accelerate market consolidation. Currently, tier-one operators hold an estimated two-thirds of the UK market. However, Josh Hodgson of H2 Capital proposed that this share could climb as high as 80% as smaller operators struggle to absorb the increased costs.
Unlicensed operators pose 'real risk'
Beyond market consolidation, Clarke emphasised the danger of players migrating to unregulated, offshore operators. This concern was supported by findings from research commissioned last year by Flutter UK&I, which was first reported by the Racing Post.
The investigation involved Alex Wood, a convicted fraudster who is now a counter-fraud adviser and co-host of the BBC Radio 4 programme ‘Scam Secrets’. Over a two-week period, Wood tested the controls, or lack thereof, at a number of unlicensed gambling websites.
In one notable example, Wood was able to open an account with the Curaçao-based operator GodOdds under the identity of a 213-year-old Charles Dickens. He successfully placed a £50 bet on a horse race at Lingfield. In a separate test on the same site, he used a second account registered to a seven-year-old character named ‘Bo Peep’ to place a £50 wager on a basketball game, illustrating a complete absence of age or identity verification.
The findings from the black market stand in stark contrast to the resources invested in compliance by licensed operators. Flutter, for instance, employs 550 people who work full-time on safer gambling initiatives. Meanwhile, UK authorities have acknowledged the threat of illegal gambling, with the Gambling Commission receiving a £26 million grant earlier this year to enhance its capabilities in fighting the unlicensed market.
