Betfred founder: Tax rises are “biggest threat” to the industry
Betfred shops could vanish from UK high streets if Chancellor Rachel Reeves carries out a potential tax raid in the November budget, the company’s co-founder and chairman has warned.
Fred Done, who founded the business in 1967 with his brother, hailed tax rises as the “biggest threat” to the industry he has seen in his 57 years in the sector, echoing similar warnings from other leading gambling companies.
Reeves has previously argued that there “is a case for gambling firms paying more” adding “they should pay their fair share of taxes and we will make sure that happens”.
This follows increasing pressure from former chancellor Gordon Brown who has called the sector “undertaxed”.
Tax hike warnings
The Institute for Public Policy Research (IPPR) think tank estimated that additional taxes on the industry, as high as 50 per cent, could raise £3bn for the Treasury.
However, Reeves’ suggestion has been met with fierce backlash from the industry, who have hailed the decision “economically reckless” and damaging to their businesses.
The move comes as the Gambling Commission and Treasury consider tougher rules and levies for the gambling sector, which has already been hit hard by the £2 stake cap on fixed-odds betting terminals (FOBTs).
Earlier this month, William Hill owner Evoke said up to 200 of its retail outlets could close its doors if the industry is slapped with higher taxes.
Done echoed this warning, telling the BBC he would also feel compelled to close high street branches.
He said: “It [tax] doesn’t even need to go up to 50 per cent.
“If it went up anywhere like 40 per cent or even 35 per cent there is no profit in the business.
“We would have to close it down.”
He added that the company could also cut approximately 7,500 jobs if taxes do increase, adding 300 shops were “currently losing money” and an additional 5 per cent increase on gambling taxes would force that number to jump to 430.
Done also admitted the recent increase in employer National Insurance contributions and the minimum wage has forced the company to shoulder an additional £20m in costs.
While the company pulled in nearly £1bn in revenue its recent annual results, operating profit hit just £500,000.
Going online
He acknowledged that customers are also increasingly going online, making shop closures inevitable.
Rival firm Paddy Power said it would close 57 shops across the UK and Ireland last week, citing increasing cost pressures and challenging market conditions.
Done said: “Slowly it will go online, but we’re talking, without tax increases, we’ve still got 20 years of life on the high street.”
He also admitted that the rising costs plaguing gambling companies will damage the industry and drive more customers to bet “offshore” with bookmakers who “don’t pay anything to this country”.