Gambling stocks took a nosedive on the FTSE 100 Index this morning, with Ladbrokes and Coral owner Entain leading the decline.
The sharp drop came in response to reports that Chancellor Rachel Reeves is considering a £3billion tax raid on the industry in the upcoming Autumn Budget on October 30.
Entain's shares plummeted by nine per cent, whilst other major players in the sector also suffered significant losses.
William Hill and 888 group Evoke saw their stocks fall by 12 per cent, with Paddy Power owner Flutter and Rank, which owns Mecca Bingo and Grosvenor Casinos, both down five per cent.
The proposed tax changes are reportedly aimed at addressing a £22billion shortfall in public finances.
If introduced, the rate hike would see a significant increase in the duties paid by online casinos and bookmakers.
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Gambling giants, including Ladbrokes, have been hit hard
PA
It is understood that the Chancellor is considering doubling the 15 per cent general betting duty on high-street bookmakers' profits.
Additionally, gaming duties, currently set at 21 per cent, may also be doubled, primarily affecting online gambling operators.
These potential changes stem from recommendations by influential think tanks, including the Institute for Public Policy Research (IPPR) and the Social Market Foundation.
Notably, these organisations are part-funded by Derek Webb, a former poker player and casino game inventor who has been advocating for higher levies on gambling firms.
The Government's approach appears to target what are perceived as higher-risk gambling activities, as sources suggest that "lower harm activities" such as bingo and the lottery may remain unaffected by the proposed tax changes.
Reeves is expected to announce the tax raid in her Budget. The move comes as the Government seeks alternative sources of income to fund public services and reduce the deficit.
However, the proposed changes have raised concerns within the gambling industry. Critics argue that higher taxes could lead to unintended consequences, potentially driving gamblers towards illegal black-market operations.
There are also fears that gambling firms may pass on the additional costs to customers, potentially exacerbating gambling-related harms rather than mitigating them.
LATEST DEVELOPMENTS:
Rumours are circulating over a potential tax raid being launched by Labour
PAIndustry experts have voiced concerns about the potential impact of the proposed tax changes.
Russ Mould, investment director at AJ Bell, commented on the situation, stating, "The betting industry will argue higher taxes could lead to an increase in illegal black-market gambling and ultimately firms may well pass on any extra costs they incur to punters, potentially doing more harm."
He also offered further insight into the challenges facing the gambling sector.
Mould added: "Its notable that the speculation suggests so-called lower harm activities like bingo and the lottery will be untouched by any tax changes."
