Regulation tax warning from Ladbrokes

UK gambling industry is worth GBP 6 billion and employs over 100 000, says chief executive

Ladbroke's chief executive officer, Chris Bell, who recently announced his impending departure from the UK gambling group, has warned that Britain must take a more enlightened approach to the regulation and taxation of the bookmaking industry or risk damaging the nation's 8 600 betting shops.

Bell made the observation as he unveiled a new report from independent accountants Deloittes showing that the betting industry contributes more than GBP 6 billion to the UK economy and sustains in excess of 100 000 jobs.

Ladbrokes commissioned the report after listening to "...a lot of people in the corridors of power who have not realised the scale of this industry. Politicians have been very surprised by how much tax we pay and how many people we employ," Bell said.

The report found that the industry's retail, or betting shop, division alone generates GBP 700 million in wages paid to staff and pays GBP 700 million in taxes – almost as much as its GBP 800 million operating profits.

"There are few industry sectors that pay as much in tax as their profits," Bell pointed out.

Of the GBP 3 billion direct economic impact, betting shops provide GBP 2.2 billion, with gambling over the Internet, telephone and exchanges providing the rest.

The industry directly sustains 40 700 full-time jobs, mostly in betting shops, while it indirectly supports a further 62 300. The report found its indirect economic impact to be GBP 3.1 billion.

Pointing out that "...the number of shops we have here is largely dependent on taxation and regulation", Bell said: "For this industry to be successful onshore and offshore, it needs a more positive regulatory approach and a more sensible tax approach."

He called for greater flexibility over machines in the shops – either by raising the current limit of four or allowing new games, and Internet terminals in the shops – though he admitted this would be a "hard sell" to the Treasury, bearing in mind that such a move would enable Ladbrokes to redirect bets to its offshore operations in Gibraltar where it pays only nominal tax, so reducing the UK's tax take.

Bell gave an indication of the importance of the Internet medium to gambling groups when h said that without Internet connectivity in land betting shops, these establishments would become "...just a resource for information where people wander in and then use their iPhone to place a bet".

Bell's warning was perhaps designed to coincide with the looming prospect of a general election in the UK, and the concomitant political manoeuvring that such an event inevitably brings about.

Politicians in the contesting parties can be expected to talk about their taxation policies and make decisions that can have far reaching effects on industries, especially if these are not well-informed.

2001's abolition of 9 percent betting duty, based on turnover, and its replacement with a 15 percent tax on gross profits is an example that comes to mind.

Although Bell subsequently denied that his warning was a pre-emptive strike against political developments, he added that he did hope politicians would responsibly use the report's factual data rather than aim to 'score cheap political points' in the run up to the election.

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