On 27 November the government announced its plans for a new statutory levy on gambling operators, whilst also confirming that stake limits on online slots will be implemented. These are the first announcements the new Labour government has made on gambling reform. Here we consider the contents of these reforms and the impact that they may have on gambling operators in the UK.

Background

The announcement of the statutory levy and online slot stake limits will not come as a significant surprise to those operating in the gambling industry. The Gambling White Paper (published in April 2023 by the then incumbent Conservative government) cited both as areas requiring regulatory scrutiny and possible reform. Consultation was also subsequently undertaken by the Conservative government:

• Statutory levy: Consultation took place between October and December 2023. The government’s response has now been published, and the regulatory changes proposed are addressed in this update.
• Slots: Consultation took place between July and October 2023 and the government response was published in February 2024. The response indicated that new regulations would be introduced by September 2024 to implement maximum stake limits on online slot games of:
  • £5 per spin where the player is aged 25 and over; and
  • £2 per spin where the player is aged 18 to 24.

With the change in government occurring earlier than anticipated, following the general election being called earlier this year, the slots regulations proposed by the Conservative government never came into force.

Slots

The announcement confirms that the Labour government will introduce a statutory instrument to implement a maximum stake limit on online slot games. The key points for operators to be aware of are:

1. The limits will align with those set out above (i.e. £5 per spin where the player is aged 25 and over and £2 per spin where the player is aged 18 to 24)
2. As confirmed in the ministerial statements in the House of Commons and the House of Lords, there will be an implementation period where operators will have 6 weeks to achieve compliance with the new £5 requirement, and a further 6 weeks to implement the £2 limit.

Operators should therefore begin taking steps to ensure that these requirements can be implemented and should keep a close eye on the statutory instrument being passed, so that they can achieve implementation within the defined periods. 

Levy

The consultation response indicates that a statutory levy will be introduced to replace the current system, whereby voluntary industry contributions are used to fund research, prevention and treatment of gambling-related harms. The government estimate that the statutory levy will raise £100 million per year when fully in force, which will be distributed as follows:

• Research: 20%. UK Research and Innovation will oversee the majority of funding, though some funding will be provided directly to the Gambling Commission for its own initiatives.
• Prevention: 30%. This will be used for prevention and early intervention on gambling related harms.
• Treatment: 50%. This funding will be overseen by the NHS and used to commission a full treatment pathway.

Rates

Whilst all licensed operators will be subject to the statutory levy, the rate varies by operator type. Full details of the rates can be found in the response. Largely, online operators (excluding online society lotteries) will pay a rate of 1.1% of Gross Gambling Yield (GGY) and land based operators 0.5%, 0.2% or 0.1%. The higher rate for online operators is driven by the government’s view that online gameplay contributes to higher ‘problem gambling’ rates.

These rates are higher than the amounts initially proposed in the consultation. For example, online operators were to pay 1% under the initial consultation proposals. It should also be noted that the government has maintained the de minimis threshold concept, meaning operators whose levy payments would amount to £10 or less will not be subject to the levy. However, this threshold is significantly lower than the de minimis threshold set out in the Horserace Betting Levy, which is charged at 10% of profits accrued through leviable bets and includes a provision exempting the first £500,000 GGY from being in scope of the levy.

Timing

The levy will be introduced via secondary legislation and will commence in April 2025. The phased approach to the levy proposed in the initial consultation has been dropped by the government, with the notice period provided being deemed sufficient. Until the levy is introduced, operators must continue to make their existing voluntary contributions.

Comments

The announcement of the levy may not come as a surprise, but it is notable to see that the new Labour government will impose a higher levy than its predecessor which commenced the consultation process. For example, the levy rates have been increased (for example, by 10% in the case of online operators) and the phased approach to implementation has been dropped. It remains to be seen whether these initial steps taken by the Labour government in addressing gambling reform might be the start of a trend of taking forward proposals made under the previous government substantially in the same form, but with the addition of certain additional burdens for UK-facing regulated operators. 

The announcement of the statutory levy comes at a challenging time for the gambling industry in the UK, given the context of potential wider reforms to gambling duties which were announced in the 2024 Autumn Budget. The Treasury will consult on proposals to reform gambling duties in 2025 with the aim being to bring remote gambling into a single tax structure. The statutory levy will, in effect, act as an additional layer of taxation on the profits of gambling operators (on top of the existing horserace betting levy) which, one hopes, will be taken into account in the proposed Treasury consultation.