MPs debate gambling tax impact on Gibraltar economy

There is increasing political debate about the UK’s planned gambling tax increases. Discussions centre on the potential knock-on effects for Gibraltar. During the Finance Bill’s third reading, MPs discussed whether higher duties could disproportionately impact the territory’s economy. There were also clashes over claims that tax hikes could fuel black market activity.

Calls for Gibraltar impact assessment

The UK government faced calls to formally assess how gambling duty increases could affect  Gibraltar’s economy during a Commons debate this week.

Labour MP Gareth Snell proposed an amendment to the Finance Bill. This would require an official review of the impact of Remote Gaming Duty rising to 40% and Remote Betting Duty to 25%.

“One third of Gibraltar’s tax receipts come from the [gambling] sector, so anything we do in this place that has an impact on the sector there – I entirely accept that this is not an intended consequence of the decision – would leave a huge hole in its economy, and that will have to be filled.” - Snell

The amendment suggested that findings should be published by April 2027. It would focus on how sections 83 and 84 of the legislation could influence Gibraltar’s economic position.

Snell warned MPs that the territory’s reliance on gambling revenue makes it particularly exposed. He stated that around one-third of Gibraltar’s tax receipts come from the sector. This would mean that any disruption could leave a significant gap in public finances.

Gibraltar’s reliance on gambling revenue

Concerns raised in Westminster echo warnings from Gibraltar officials. Nigel Feetham has previously described the UK tax changes as a serious threat to the territory’s economy.

He argued that the structure of the new duties, which are based on revenue rather than profit, could sharply increase operators’ effective tax rates. This could increase to between 80% and 100% in some cases.

Figures mentioned during the debate show that around 3,500 people are directly employed in the gambling sector and roughly one-third of total tax revenue for Gibraltar comes from the sector.

Snell added that any reduction in operator turnover, or changes in UK customer behaviour, could significantly reduce Gibraltar’s tax base. He suggested the potential shortfall could run into tens or even hundreds of millions of pounds.

Black market concerns dismissed

Alongside economic concerns, MPs also debated whether higher taxes could drive players towards unregulated operators.

Snell called for an additional assessment into the potential growth of the black market. However, this argument was challenged by Alex Ballinger.

Ballinger said claims about black market expansion are often overstated. He argued that industries linked to harm frequently use this argument to resist tighter regulation or higher taxation. He pointed to previous findings from the UK Gambling Commission. These showed that only a small proportion of UK players use unlicensed sites.

Meanwhile, Dan Tomlinson confirmed that the government does not plan to amend the bill further. He stated that ministers will continue to monitor the impact of the changes and maintain dialogue with Gibraltar authorities.