Betfred, one of the UK’s largest betting firms, is in deep trouble. These problems have led to the potential shutting down of all 1,287 of its stores across the country. Fred Done, founder and Chairman of Betfred, has voiced his concerns over the UK government’s planned increase to gambling taxation. He fears this maneuver could endanger at least 7,500 jobs in the company’s newly combined retail operations.
Founded in 1967 by Fred Done and his sibling, Betfred has certainly made a fortune on the gambling industry. As of its most recent annual results, the company is up almost £1 billion in higher revenue. Even with these enormous revenues, the company made an operating profit of just £500,000. This is just months after it endured a triple dose of asset writedowns. This precarious financial situation means that Betfred is understandably jumpy about any changes to the funding and taxation policy.
As it stands, around 300 Betfred shops are losing money hand over fist. Done warns that a relatively modest 5% increase in gambling taxes would increase that figure to as many as 430 outlets. He argues that if taxes on UK gambling companies rise significantly, he would be compelled to shut down his High Street shops.
Betfred are based not only in the UK, but Gibraltar, the US and South Africa. The firm spends more than any other on both digital wagering and in-person High Street bookmaking. Done highlights that these storefronts offer far more protective measures for those battling with gambling addictions than offshore options.
“Once the [UK] industry is shuttered, it’s lost,” Done said. “People are going to continue to wager, but they’ll wager offshore with it. There’s plenty of bookmakers offshore who happen to take the bets, who don’t pay anything to this country.”
In recent discussions, Rachel Reeves, a key political figure, acknowledged the need for gambling firms to contribute more to public finances. She’s been a strong advocate for requiring gambling firms to do more. That’s why they have to pay their fair share of taxes, and she’s going to make sure that they start to.
The deal undercut the gambling industry’s current tax structure that taxes all casino gaming stakes—including online—at 21%. On top of this it sets a rate of 20% on slots and gaming machines, a 15% general betting duty on sports fixtures, and a 25% rate for horseracing. Sector experts have made clear that increased duties will harm the industry’s long-term viability. They should be especially troubled since a large share of profits depend on high-loss gamblers likely to experience severe harm.
Prof. Ashwin Kumar, Director of Global Racing and Gaming Operations at the University of Nevada Reno, said now is the time for increased taxation on gambling firms. He argued that these companies make the vast majority of their profits off a small set of high-risk gamblers, an argument just like those used to regulate tobacco and alcohol.
Done was also critical of the prospect of raising taxes. He claimed that even raising it to 35% or 40% would render his business unprofitable. This would be a catastrophic scenario, leading to near total employment extinction. We would have to shutter it up. I’m talking about massive job losses. We’re talking about 7,500 likely,” he told them.
Today, a spokesperson from Her Majesty’s Treasury made clear that these concerns were misplaced. An aide told us, “We don’t comment on speculation about future changes to tax policy.” Betfred and its employees are left in limbo by this uncertainty. Just today, we all saw the excited cheers of the business community as they awaited news on tax reform.
Done is cautiously optimistic that such an avenue is possible if High Street betting shops are spared any tax hikes for the next 20 years. He admits that higher taxes would accelerate their fall into digital universes.