UK Horseracing Tax Exemption Stands as Gambling Sector Faces Hike

The UK’s digital gambling industry faces unprecedented financial reforms after an accidental disclosure by the Office for Budget Responsibility OBR) revealed plans to nearly double remote gaming duties. Chancellor Rachel Reeves has endorsed the policy, raising taxes on online casinos and sportsbooks from 21% to 40%. The climb is steeper than the 30-35% predicted by industry analysts.

The tax changes spare land-based betting venues and horseracing, following lobbying, while eliminating bingo levies. Reeves framed the change as targeting the sector’s “highest levels of gambling harm”, projecting £1 billion in additional revenue by 2031. The OBR has apologized for its premature release, citing technical errors, and has started an internal investigation.

Digital Tax Surge

The rise of online gambling operator taxes from 21% to 40% is the steepest in UK history. Physical venues escaped significant changes, with horseracing duty locked at 15%, while bingo halls gain full tax exemption from 2026.

The overhaul extends to online sports betting, rising from 15% to 25%, though excluding horseracing and physical terminals. Treasury anticipates that tax projections will shield income tax and VAT from increases. However, analysts warn that the disparity between regulated and offshore platforms risks player migration.

Horse Racing Sector Relief

The British Horseracing Authority (BHA) applauded the exemption of horseracing from tax increases as a nod to the sport’s cultural and economic significance. However, it cautioned that broader betting industry reforms might indirectly strain the industry. Acting CEO Brant Dunshea praised the frozen 15% horserace betting duty as “an important step” to protect 85,000 jobs and revenue, emphasizing racing’s role in connecting communities and showcasing Britain globally.

Industry Collaboration Plans

Dunshea also acknowledged risks from higher taxes elsewhere in gambling, stating, “We recognize that the increase in general taxation on the betting industry may have trickle-down effects on racing. We will work with our partners in the betting industry to understand the implications of this.” He pledged to collaborate with betting firms to address the fallout.

BHA Chair Lord Charles Allen termed the decision a validation of racing status as a “vital part of the fabric of the British way of life,” vowing to use the clarity to reignite growth talks with policymakers and operators.