Stewart Kenny, the founder and former CEO of Paddy Power, has called for increased taxation on gambling companies, asserting that this move could help mitigate the promotion of addictive betting practices. Speaking before the Treasury Committee, Kenny highlighted the shift in focus from traditional sports betting to more addictive online casino games, which often lure customers with incentives like free spins. He stressed that such strategies pose significant risks, particularly to young people who may find themselves ensnared in harmful gambling habits.
Kenny, who helmed Paddy Power from 1988 to 2002 and remained on its board until 2016, expressed regret for his role in the burgeoning online gambling industry. Reflecting on his career, he acknowledged that while betting remains a legitimate form of entertainment, the industry’s current trajectory prioritizes addiction-driven profits over recreational enjoyment. This, he believes, is a fundamental misstep that needs to be addressed.
In advocating for change, Kenny urged the government to levy higher taxes on casino-style games and online slots. He posited that financial pressure is the most effective mechanism to redirect the focus of gambling companies back to traditional betting markets, such as horse racing and sports events, which historically carry less risk of addiction.
Dismissing claims made by some in the industry that higher taxes would devastate employment or drive consumers toward illegal betting, Kenny labelled these arguments as mere ‘scare tactics.’ He recounted similar strategies used during his tenure in the betting industry in Ireland, pointing out that when Ireland raised its betting tax from 1% to 2% in 2019, the revenue from the gambling sector nearly doubled, increasing from EUR 52 million ($60.5 million) to EUR 95 million ($110.5 million). Despite concerns, he observed that the industry’s profits have consistently soared over the decades, suggesting that modest tax hikes would not necessarily lead to job losses.
As the UK anticipates the Chancellor’s next Budget, there is speculation over whether gambling firms will face new tax measures. The Institute for Public Policy Research has projected that reforms in gambling taxation could generate up to GBP 3.2 billion ($4.2 billion), potentially alleviating poverty for approximately 500,000 children. Such figures strengthen the case for revisiting how gambling is taxed, particularly in a socio-economic climate increasingly aware of wealth disparities.
However, the Betting and Gaming Council, representing major companies like Flutter Entertainment and Entain, warns that increased taxes could lead to the closure of retail betting shops, endangering up to 40,000 jobs. Flutter, which owns Paddy Power, recently announced plans to close 57 shops across the UK and Ireland, attributing this decision to rising operational costs and challenging market conditions. Industry leaders like Fred Done, founder of Betfred, argue that new tax burdens could obliterate their storefront presence altogether.
Kenny, however, dismissed these concerns as misrepresentations, suggesting that the closures are more aligned with broader business strategies rather than tax implications. He emphasized that many shops were already under strain due to changing consumer behavior and the growing dominance of online gambling platforms. Kenny’s assertions urge policymakers to reconsider the true impact of tax policies on the sector, challenging narratives that attribute business challenges solely to fiscal changes.
This debate unfolds amid a broader conversation on responsible gambling and the role of regulatory frameworks in safeguarding vulnerable populations. On one hand, proponents of higher taxes argue that they serve as a necessary check on an industry that has, in many ways, outpaced regulatory oversight. On the other hand, industry representatives caution against moves that could destabilize the market and lead to unintended economic consequences.
As these discussions continue, the balance between encouraging responsible gambling practices and maintaining industry viability remains a critical consideration. Stakeholders on all sides are watching closely as the government weighs potential reforms, acknowledging that the outcome could redefine the landscape of gambling in the UK and beyond.
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