The sector was under pressure after reports the Chancellor could look to raise up to £3 billion by hiking taxes on online casinos and bookmakers.
Gambling firms have seen their shares tumble amid fears the Government is planning to double some of the taxes paid by online casinos and bookies in the upcoming Budget.
Ladbrokes and Coral owner Entain led declines on the FTSE 100 Index on Monday morning as its shares slumped 9% after a report late last week that Chancellor Rachel Reeves was mooting the tax raid to raise up to £3 billion.
Ms Reeves is said to be considering the move to help plug a £22 billion “black hole” in the public finances, according to the report in The Guardian late on Friday.
Shares were sent sharply lower across the sector when trading opened on Monday, with Entain’s rivals such as William Hill and 888 group Evoke down 12%, followed by Paddy Power owner Flutter down 5% and Rank, which owns Mecca Bingo and Grosvenor Casinos, down 5%.
It is understood that Ms Reeves could announce the tax raid in her October 30 Budget, with plans under consideration said to include the doubling of the 15% general betting duty on high-street bookmakers’ profits as well as gaming duties, currently charged at 21%, which will hit online players.
The proposals reportedly follow recommendations put forward by influential think tanks the Institute for Public Policy Research (IPPR) and the Social Market Foundation, part-funded by multimillionaire Derek Webb – a former poker player and casino game inventor who has been leading calls for higher levies on gambling firms.
Russ Mould, investment director at AJ Bell, said: “Labour is desperately looking for ways to raise revenue, having ruled out increasing taxes on ‘working people’.
“It’s notable that the speculation suggests so-called ‘lower harm’ activities like bingo and the lottery will be untouched by any tax changes.
“The betting industry will argue higher taxes could lead to an increase in illegal black-market gambling and ultimately firms may well pass on any extra costs they incur to punters, potentially doing more harm.”
He added the reported tax plans are a “salient reminder of the strengthening headwinds the sector faces in terms of regulation and tax”.
