The British gambling industry is staring into the abyss.
In what one source described as a catastrophic corporate comms failure, gambling harms campaigners have outmanoeuvred industry trade body the Betting and Gaming Council (BGC) and convinced the horse racing sector that its interests are better served aligned with them. Dramatic tax rises and a new round of regulation are now on the cards. NEXT.io has spoken to several participants at the heart of the action to hear how the gambling industry lost its most potent political ally, and what comes next.
At the Peers for Gambling Reform Summit on Wednesday (3 September), taking place just a stone’s throw away from Parliament at the plush St Ermin’s Hotel, many of the most influential voices in the British gambling reform movement met for a day of talks and discussion. During one early panel, hosted by The Guardian’s Rob Davies, the question was raised of whether it was possible to reduce harm and grow the gambling industry at the same time, currently the government’s stated policy. The answer from the panel was a resounding ‘no’.
“The more consumption that you have with gambling in the population, the greater the harms,” Glasgow University’s Professor Heather Wardle said. “To reduce the harms, you reduce the consumption. Now that means a smaller gambling industry, a smaller gambling sector. And I think it’s really important to be honest about that.”
A panel discussion takes place at the Gambling Reform Summit, September 2025
Professor Wardle was referring to something called the Total Consumption Model, a public health theory which alleges the level of gambling harm in a population is directly correlated with the total level of gambling — meaning a large gambling sector could be considered a failure on harms, even with stringent responsible gambling protections.
Of course, those with an interest in the issue don’t necessarily speak with one voice. Speaking to NEXT.io, prominent gambling harms campaigner Matt Zarb-Cousin argued that, while he did not believe it wise for the industry grow in its current form, perhaps one day a reformed sector might be able to increase aggregate consumption across the sector without an impact on harms.
Overall though, supporters of industry reform have been clear. Online casino, the profit engine at the heart of the gaming industry, and the area experts say has the most propensity for harm, needs to be cut down to size. Concerns about what effects this would have on the UK black market and employment figures are taken seriously by them, but ultimately, they believe those risks can be effectively managed.
They are likely to succeed in their goal. Sources told NEXT.io that, in contrast to the official policy of tax harmonisation currently out for consultation at the Treasury, the tax rise proposals pushed by think tank the Social Markets Foundation (SMF), as well similar measures floated by the Institute For Public Policy Research (IPPR), are likely to be what the cash-strapped Treasury ends up going for. Sources familiar with the SMF’s thinking said the floated 50% differentiated tax for higher-harm products set out in its July report was likely intended to achieve a more realistic rate of 35%, and they are optimistic this will be put forward in the upcoming Autumn Budget. This has also been corroborated by recent mainstream media political reporting, which has warned the industry is likely to come in for a squeeze.
In fact, by all accounts the gaming sector was lucky to have escaped relatively unscathed in last year’s budget, in advance of which gambling stocks fell throughout the sector in expectation of a general tax hike. Up from the current 21% rate, an increase of this scale would indeed go a long way towards achieving Wardle’s goal of a “smaller gambling industry”.
However, the SMF’s report did not recommend a tax hike for every operator. In keeping with its theme of differentiated taxes for products with different levels of harm, horse racing betting, it advised, should have its tax rate lowered to 5%, with an additional 20% Horse Racing Betting Duty placed on top — the proceeds of which are funnelled directly towards improvements in racing.
This proposal was not an accident, but the result of long-term political manoeuvring on the part of gambling harms campaigners to peel off racing, by far the industry’s most respected element, away from the wider sector. The success of this strategy is a testament to the skill of campaigners like Matt Zarb-Cousin and interested experts like the SMF’s Dr. James Noyes — as well as a stark warning about what the industry is up against. An industry whose sluggish trade body, the BGC, has been outmanoeuvred and outclassed at every step along the way.
Racing and gambling reform campaigners haven’t always been the best of friends. In fact, following on from the affordability checks battles of last year, in which racing figures and their allies in parliament bitterly opposed the measures they deemed an existential threat to the sector, many of the major reform figures were persona non-grata with racing bigwigs. Dr. Noyes and other figures’ initial attempts to contact industry figures last year were said to have been rebuffed.
Zarb-Cousin told NEXT.io the idea for a racing-campaigner alliance dated from the breakdown of the Horse Racing Betting Levy talks between the BGC and the British Horseracing Authority in summer 2024, which saw the industry’s trade body reportedly pull its support for a last-minute deal after PM Rishi Sunak’s decision to call a snap election.
He highlighted how racing was used a political shield by the sector, most of whose profits are derived from iGaming: “What did racing get? It hasn’t managed to get what it wanted out of the levy negotiations, the commercial model of the sector has not been challenged, which has been detrimental to racing — [that] is the cross promotion of the more addictive content. And I feel like racing has repeatedly undersold itself.”
In September 2024, using a third-party fixer, campaigners were able to secure meetings with several people in the racing industry including trainers and racecourse owners, including a prominent and politically engaged Newmarket trainer.
Elements in horse racing put them in touch with a director of Plumpton Racecourse who was involved with pressure group the Professional Racing Association (PRA), with the director later highlighted in the July 2025 SMF report. Arena Racing Company chief executive Martin Cruddace, often considered to be among the most powerful figures in racing, was reportedly on board with the coalition from early on, having given positive comments to The Guardian’s racing reporter Greg Wood in October 2024.
The fixer was also able to secure Zarb-Cousin a spot on the popular Barstewards Enquiry podcast, which has historically shared racing tips content and taken a negative stance on reform topics such as affordability checks.
Throughout, the idea was to build grassroots support to force major stakeholders to the table. As Zarb-Cousin argued on the Barstewards podcast: “It’s time for racing to get the target off its back and cut the cord with online casino.” He made the point that racing might be much more persuasive on its own than shackled to the politically toxic online casino industry, and argued some kind of racing exception to affordability checks could be worked out.
Some industry figures have alleged this was the point at which the BGC dropped the ball. It’s quite a step from appearing once on a podcast to achieving a consensus among the sector as a whole, and the industry’s major trade body failed to mount an effective counterattack as the campaign picked up steam. Sources close to the campaign said they were initially expecting a much more intense pushback from the industry but found themselves marvelling at the trade body’s apparent interest instead in fighting endless internecine battles over harms stats on X.
“I think the BGC doesn’t really have a grasp of political management,” Zarb-Cousin said. “They think that everything they do is PR, and they look at everything through the perspective of PR. And this is a space where relationships are very important — authentic, real relationships — not people trying to look like they’re doing something.
“They’re so used to fighting a PR battle that I think they lost their grip on actual relationships.”
Senior figures at major gaming operators are reportedly furious with how poorly the BGC handled this — although the committee nature of the organisation, featuring otherwise duelling operators with somewhat divergent interests, has been highlighted as part of the problem.
After the Barstewards episode gained a lot of traction, the campaign secured Zarb-Cousin a spot on Racing TV, where he repeated the same message. Some in the camp were initially fearful Zarb-Cousin would be ambushed on the show due to his support of a greyhound racing ban, but he was able to hold his own and proved a capable advocate of the message.
In another initiative, ex-Paddy Power CEO Stewart Kenny, famously the executive who changed his mind, and Zarb-Cousin penned an op-ed pushing for a joint alliance between racing and gambling harms campaigners published in Thoroughbred Daily News. NEXT.io understands the op-ed was initially offered to The Racing Post due to Kenny’s connections, but the publication ultimately turned it down.
The piece read: “Horse racing should be as far away from online casinos as possible, but its representatives have allowed it to be used as a tool by the gambling lobby to argue against more regulation of the sector, and to protect a commercial model that is not in its interests, nor in the interests of punters.”
Sources said the culmination of half a year of spreading this message was a Chatham House rules SMF roundtable in May this year, which later led to the publication of the July report. The roundtable featured many prominent racing figures who were reportedly by then fully on board with plans to unite with the campaigners. There are rumours of tension between Arena and individuals associated with the PRA in the lead up to the meeting.
In a sign of how distant racing has become from its former gambling industry allies, in just under a week the sector is going on strike to protest the Treasury’s alleged existing plan of tax harmonisation, which it terms the racing tax.
One source told NEXT.io they believed racing had been naïve in joining forces the campaigners, arguing that, even if they escape a higher tax rate, sponsorship money from operators will dry up and damage the sport in the event they are successful in achieving the differentiated rate.
They also expressed frustration at the campaigners’ alleged failure to follow on from their promise of agitating for a relaxation of racing’s affordability checks, although acknowledged they have stuck to their end of the bargain on the tax front. NEXT.io understands the campaigners themselves have said racing affordability will be challenged after the budget, which they believe should come first.
One individual, speaking to NEXT.io under condition of anonymity, argued what has happened can be seen as racing’s “Brexit moment,” in which the sector moved to cut ties with its closest trading partner. Just this week Flutter announced it was pulling its sponsorship of ITV’s Champions: Full Gallop due to possible tax rise fears, which is possible to interpret as a shot across the bow to show racing what a future without the gambling sector might look like.
Last month, the tax campaign got a significant boost after ex-PM Gordon Brown backed the gambling hike in a Guardian op-ed, arguing the government should use the money to alleviate child poverty. One individual suggested to NEXT.io the intervention could have been a favour called in by an SMF director who previously worked with Brown during his premiership.
“Gambling levies aren’t the only source of revenue that could pay to alleviate child poverty,” the former prime minister wrote. “But this should be one straightforward budget choice. The government can fulfil today’s unmet needs by taxing an undertaxed sector. Gambling won’t build our country for the next generation, but children, freed from poverty, will.”
The tax rise now has the support of Labour Party heavyweights, the APPG on Gambling Harm, the APPG on Horse Racing, as well as the SMF’s powerful allies in the Treasury itself. Dan Tomlinson MP’s recent promotion to exchequer secretary is also dim news for industry, with some suggestion his support for wider tax reform could see easy targets like the gambling sector used to raise additional cash.
Going forward, it seems likely the constellation of forces drummed up by racing and gambling harms campaigners working in unison may prove a potent force beyond any one particular tax rise. “To be honest with you, once this tax thing’s out the way, I’d like to do more with that coalition that we’ve built as a result of this,” Zarb-Cousin told NEXT.io.
In terms of the campaigners’ endgame, the introduction of a new Gambling Act is a long-term goal, as would be the introduction of minimum liability law and more advertising restrictions, among other measures — although Zarb-Cousin said the campaigners haven’t decided exactly what they will push for. Some kind of racing carveout for some of these measures is being floated, and the Horseracing Betting Forum is reportedly on board.
Arguably, a never-ending squeeze of the licensed sector, which has recently digested major responsible gambling reforms, could be counterproductive for preventing gambling harms. The experience of other European countries suggests punitive measures risk the creation of large black markets, which don’t feature player protections and don’t pay any tax at all.
Also speaking at Wednesday’s Summit was Yield Sec founder Ismail Vali, who compiles data analysis of the online unlicensed segment and warned it had grown dramatically in recent years, now approaching 10% of the total market.
Yield Sec data shows the size of Britain’s black market
“Illegals in Great Britain cannot beat legals across price, product or promotion consistently,” Vali said. “There is no good reason for mainstream consumers to use illegal gambling operators, so, crime only targets those consumers who have bad reasons for requiring illegal gambling operators: they are under 18 and they are on the GAMSTOP self-exclusion scheme.
“Crime loves this audience as they are now plentiful, have no legal options and are incredibly cheap to market to.”
Even if his analysis is correct, although it has seen pushback from Regulus Partners’ Paul Leyland, the targeting of under-18s and the self-excluded means even a small percentage rise in black market activity could have an outsized effect on harms.
On the black market threat, Zarb-Cousin argued a more tightly regulated sector might lead to fewer GAMSTOP registrations, thereby cutting off the not-on-GAMSTOP phenomenon, and that the black market could otherwise be constrained through more robust enforcement.
Nothing is certain. Campaigners could very well be disappointed by Rachel Reeves’ budget, as they were last year. And perhaps racing and its new allies indeed have too divergent interests for the partnership to survive long-term.
However, the industry must get to grips with the total failure of its political strategy, which has alienated allies, failed to convince the public and been unable to articulate a convincing argument for its own existence.
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