Ep 383: UK Budget and high-stakes US Election
Hello and welcome to today's edition of iGaming
Daily, when for a change we'll be talking about
some news that didn't happen, namely the much
expected rise in gambling taxes in the UK budget.
So join me to discuss this non-event and other
matters arriving from Rachel Reeves' historic
first budget are SBC's content director Ted
Menmure and payment expert editor Ted Orme
Clay. Well, Ted. down in London. How are you
today? Very well, Martin. How's your break?
Yeah, very good. Peaceful. I've had enough of
airports for one year with all the travel we
do with work. So I sat around the house for
a week. It was extremely relaxing and quite
pleasing. So thanks for asking. And Ted, how
are you back in Manchester after a trip to,
I believe, Monaco last week, which is like Ashton
and Lyme where our office is. Yeah, almost
identical in every conceivable way, actually.
Yeah. You know, the city state of Ashton was
famous for its casinos, F1 tracks and high performance
sports cars.
Yeah, yeah. Back in Manchester after a trip
to France and Monaco to the Sportale conference,
which was a very, very interesting love, a lot
of good panels and speeches all about sports
business, sports tech, broadcasting sponsorship.
Yeah, if we can just alert Rachel Reeves that
you were taking the SPC private jet. Yeah. And
Ted, as you appear to, I'll set you up to for
a bit of self-promotion there and you've missed
that open goal. So you can read all about some
of those, the interesting panels from that conference
on Insider Sport. Right. Before we get into
chatting about the budget. It seems a good time
to mention that iGaming Daily is brought to
you in part with OptiMove, the number one CRM
solution for the iGaming industry. Okay, with
that out of the way, let's start maybe by being
a bit more general rather than going straight
into the bit about the gambling tax, which is
talking about something that didn't happen.
Ted, what are the main takeaways you had from
the budget? Is it a... Labour came in with
this big promise they were going to be the party
for growth and they're going to support business
and so on. What do you think businesses in the
gambling industry and perhaps other sectors
should take away from what we heard last week?
Okay, so this budget marks a shift from the
prior government strategies. So it's moving
incentives or incentives for economic growth.
into public investment. I think that is labor's
long-term view of how it wishes to realign
and fix the economy. From taking an overall
view, Rachel reads one of this budget and literally
just announced that, look, the economy needs
to fill a 40 billion pound black hole. Businesses
will face increased taxes, notably... and national
in high-end insurance contributions. And this
was detailed as the main kind of fiscal tool
by the Chancellor to fill the deficit. High
interest rates also will raise kind of costs
on business. And some argue that the budget
kind of transfers wealth from companies into
public services, which will kind of divide
opinion on kind of labor strategy. Overall,
kind of the tax deficit. whether placed on
business will affect consumers indirectly, directly
or indirectly. So the burden will be borne
by the electorate. It was a budget of tough
measures and a budget of tough medicines. And
I think one that the Labour government did not
want to announce, but it has to kind of look
to fix the UK economy. Yeah, I think that's
right. And it's a budget that's had. we are
at least four years away from the next election.
So we're getting the painful stuff out of the
way now. But you did raise an interesting point
there about how they're trying to refocus the
economy because if things go to plan, the public
sector will be the highest percentage of the
UK economy. It's been since Jim Callaghan's
government back in 1979. So it's a... a bit
more to this rather than just a few pence on
national insurance here and there. Some people
pay more in inheritance tax and so on. The overall
theme of it is genuinely historic. It's the
first time for a long time I've been able to
say that about a budget. Ted, what did you
pick out as highlights from it? Anything much
relating to sort of payments or investment
or any of the beat you cover on payment expert?
Yeah, it's an interesting one. I think, well,
firstly, obviously Ted's hit the nail on the
head really with, I think what the Labour government's
ambitions are. Obviously their focus is on stimulating
growth through investment. Part of this investment
from some of the stuff I've read is into this
quite extensive plan for funding into more
research. This is obviously going to be quite
varied, you know, research can cover just about
anything. But I think from the payments and
fintech side of things, Labour have been very
vocal over the past couple of months about they
want to see continued support for certain financial
innovations and initiatives, certainly fintech
ones. There's been a lot of discourse around
open banking and artificial intelligence, unsurprisingly
really given how much those are dominating
a lot of discussion in fintech and payments
at the moment. This is also kind of a continuation
of what the conservatives are trying to do,
particularly under Sunak, who is quite a big
fan of the financial services sector. I think
probably given his professional background,
obviously, Labour are trying to build on that
and put their own sort of spin on it in their
own, in their own style, obviously being a very
different ideological party to the conservatives.
This is, obviously, this is the, this is the
area that I think is probably for the payments
and fintech kind of sector to keep an eye on.
where this research funding might go and how
they can benefit from this. And then in turn,
I guess, how the gambling sector, stakeholders
in that should probably pay attention to that
and see how they could benefit. There's obviously
a lot of conversations around what FinTech initiatives
and payments initiatives, what potential they
can have for the gambling sector. We saw that
discussed quite a bit at our conference in
Lisbon a couple of months ago. And it's obviously
quite a common talking point on a lot of our
media sites as well. Obviously, to build on
that, though, the main way that they're planning
on funding this is through these tax raises.
I think they want to raise an additional 40
billion in tax, a lot of it chiefly from companies.
I think that is, there's been, the kind of
the reaction I've seen has been mixed. There's
been a lot of welcoming of the research, but
a lot of caution around the taxation side of
things because businesses are a bit worried
about what financial burden this could place
on them. interesting there on the one hand,
they're doing things to encourage research,
encourage technological development. On the
other hand, they're removing some of the rewards
for it with the capital gains tax changes.
But ultimately, you know, something has to pay
for public services, doesn't it? And we can
argue, I'm sure even the three of us will probably
have different opinions on what that is. And
I'm sure there are about 20 different opinions
amongst the members of the House of Commons
as well. So let's focus a bit on the gambling
side of things then. I mean, obviously the
rise in employers' national insurance is going
to be a big cost for, in particular, the big
employers in the sector, the tier one businesses
and particularly those with retail estates
and so on. temptation that Rachel Reeves did
avoid was increasing gambling taxes despite
some sort of pressure from people who you would
regard as natural labor supporters, I think.
So Ted, perhaps you could tell us a bit about
what had been trailed and what the industry
feared and then I guess some of the reaction
we've had about the fact it did not materialize
in the end. Okay. So in the weeks leading up
to the budget, we had two think tanks present
to the treasury, which is effectively a doubling
on remote gambling duties or high risk games
for industry taxes. So I believe that concerns
were legitimate in general, just because I
believe that all industries and all leaderships
should be concerned about the first budget.
statement of a new government and one that really
has to fill a deficit of 25 billion pounds.
Overall, the UK government escapes the doubling
in taxes proposed by these think tanks. Really,
I don't know how seriously the treasury took
in these considerations put forward as they
would have only raised about one billion pounds.
There is somewhat of a relief across the industry
but overall, and I think most importantly is
that with the budget finished, And I think
that the industry can just return back to focusing
on the finalization or concluding the gambling
review. The Tory government can do that. So
let's hope that the Labour government can.
Will Barron Sure. And there was very deep in
the detail of the documents that came out after
the speech in parliament. There was a little
hint of some possible changes in the future
or consideration of changes in the future to
the tax regime. Yes, the Labour government
have signed that they are going to streamline
remote tax duties, especially on phone lines
and remote gaming segments under one bracket,
which is somewhat of a positive and that they're
not going to consider raising or reviewing tax
rates until the 2006 budget. So, there is scope
there. Again, this returns the industry back
to needing to finalize its generational review,
which is a positive overall. Sure. And Ted,
what sort of reaction have we seen to this
non-announcement and non-raising of taxes? I
imagine, I'm sure Ted will be a bit more clued
up on this than me coming from the SPC side
of things. It's been broadly welcomed, has
it not? I think the Bettingham Gaming Council
put out a statement praising the fact that
this wasn't in there after quite a lot of media
speculation. even some questions raised in
parliament, if I remember rightly from a parliamentary
session I saw with, I believe it was with Lisa
Nandy from DCMS. So yeah, I'd say the industry
is probably incredibly relieved to not have
this additional financial pressure. I think
as Ted outlined there, it seems to be quite
a sensible decision, I think, to let the rest
of the gambling act review adoption take its
course so that the industry sort of respond
to that and adjust to these various regulatory
changes that are coming in before any more taxation
is put on top of it to help with Labour's ambitions,
if I were to discuss, to reinvest in the economy
and things like that. Ted, sorry, I can see
you're wanting to get in on this. Yeah. I mean,
I think one of the positive things about this
budget is that, yes, it had tough measures,
but I don't think that it was punitive on industries,
right? So... The actual one-to-one tax increases
on individual industries, we got one on vapes,
which Keir was very clear that he would implement,
one on private jet flights, which was somewhat
of a surprise. And then the other kind of specific
measure, I think, was on our sugary drinks.
So gaming wasn't kind of imposing that, wasn't
put in that bracket. I think it kind of escapes
anything punitive and I think it returns kind
of labor to thinking like long-term on a tax-effective
industry and how it kind of plans for that.
So it's a positive kind of first direction
for labor and gaming. Yeah, I think so. I mean,
it would seem a fairly odd thing to do. It
is a successful industry that does raise a reasonable
chunk of money for the public finances. I think
it's about 0.3%. of the public budget comes
from gambling taxes. So why would you mess
with it? But there's no sign of the pressure
groups taking this as a defeat and going back
and thinking of something else because they've
already been outed. There's a piece unsurprisingly
in The Guardian. in which I quoted Derek Webb,
the leading gambling reform campaigner and
Labour's fifth biggest donor, describing this
as a missed opportunity and talking about how
popular it would have been with the public as
a vote winner and so on. And also the Lib Dems,
who perhaps emboldened by now being the third
biggest party in parliament and having quite
a sizeable number of MPs in there, have spoken
out against. But again, Martin, I think in
kind of the back, I'm sure any criticism of
that budget not adding gambling taxes is if
you speak to any CFO or CEO, in any budget,
they're always prepared for any increase in
taxes towards gambling. And I think kind of
leadership can kind of factor in. What they
can't factor in is the context of what was brought
forward by those think tanks, which was an
immediate doubling of taxes, right? And that
would have just sent shockwaves across the
industry, but also across the industry's value
chain, i.e. for horse racing, for advertising,
for the way it sets up its technology systems.
That would have been kind of the shock effect
of that type of budget coming in for gambling.
But there's just no guarantee that, you know,
come two years time, they will be tax raised
or not. That's up to the Labour government and
that's down to how the UK economy plays out.
Yeah, I think so. There's no doubt about it.
This budget doesn't go quite as well as they're
expecting and, you know, in any budget there's
a range of possibilities about how successful
it will be in achieving its aims. It's eminently
possible in two, three years time, Rachel includes
more tax rises in different sectors. You would
like to think though that it won't be a doubling
overnight if that is the case. Okay. Obviously,
the budget last week and the historic changes
that have been brought in during it was the
big political story in the UK. I believe there's
also something going on in the political world
on the other side of the Atlantic, which people
have been following quite closely. Start with
you a bit, Ted. There's a colossal amount of
interest from punters in the UK on the US election,
which must be an interesting spectacle if you're
sitting in the US where you're not allowed to
bet on the election. What can you tell us about
what's been happening on, in particular, the
exchanges and so on? Because they've been doing
some, they've been seeing some serious action
over the last two or three days, haven't they?
Yeah. Obviously, political betting, as you said,
political betting is not allowed in the US,
It's a very popular market, certainly around
these big elections. And I don't think you
get anything bigger than the US elections. They're
always far more of, I should say, spectacle,
I think, than our counterparts in the UK because
of them being a lot more personalised. I think
whilst in the UK, obviously things are a lot
more on a party basis. Although that has been
changing a lot over the past couple of decades,
I think. But still in the US, it's a lot more,
there's a lot more of a media frenzy and a big
sort of I don't know, media showdown around
it. There's like I said, there's a lot more
of a spectacle. So it makes it a lot more engaging
for a betting side of thing, I think. And this
election in particular, obviously we've got
the return of Donald Trump after losing the
last one and the various fiery aftermath of
that. And then you've got Kamala Harris on the
other hand, who has a lot of, you know, the
potential has become the first ever woman president
of the US. So it's a very historic one. There's
been Donald Trump is a figure that obviously
is constantly caught in controversy. There's
been all these debates around it stirring up
interest. The US elections are always a very
popular betting market. I think all of these
factors have just made that even more so. Then
to top it all off on top of that, the thing
that's really interesting to follow on the
UK is as you've mentioned with these exchanges,
Martin, UK
quite a margin, as in like there's a lot more
UK bettors betting in favor of Trump than there
are of Harris, which is interesting because
the polls are suggesting that the two are for
the most part neck and neck and a lot of the
ones I've seen more often than not are putting
Harris ahead of Trump. So there's a very interesting
disconnect between the way the betting exchanges
are expecting it and between how the official
opinion polls are expecting it. Yeah, it's
often said that the betting markets are a better
guide than the polls to who's going to win
an election, but they don't appear to be reflecting
in any way what the pollsters are saying, even
what the reports coming in from on the ground
in those US states are saying either. So it'd
be interesting to see whether we actually follow
that perceived wisdom on the importance of
political betting markets here. And just one
more thing while I've got you Ted. There's
no real impact on the... likely direct impact
anyway on the gambling industry from the presidential
election in the US. I'm sure there'll be corporate
taxes and things like that will be an issue
down the line. But on your beat, crypto is a
big issue in this. What are you expecting to
happen? Well, it will be either Trump or Harris,
I guess, but there will be a big story if it's
neither of them. But yeah, what are you expecting?
They've talked both quite extensively about
the potential offered by crypto for the US economy,
haven't they? Good news for the industry of
Trump wins, do you think? I feel that there
are certainly a few stakeholders in the industry
who would feel that way. This election has seen,
I think what I would call some unprecedented
levels of activism and campaigning among the
crypto sector in the US, at least from what
I can think of, three political action committees
that have been very active throughout all of
this. I think obviously to our non-US audiences
and any US audiences who are listening can
correct me if I'm wrong. via messaging on LinkedIn
or something, I don't know. A political action
committee is an organization that's established
to effectively just sort of channel campaign
funds towards certain candidates around who
are very active on certain issues. So from
what I've seen for the most part, the Republican
candidates, both Donald Trump for the president
and the various ones in the Congress who are
also standing this week. The Republicans tend
to be more pro crypto than the Democrats. I
think
if Harris is to be elected, we can expect a
continuation of how the Biden administration
has been approaching cryptocurrency, which I
think would be a cautious approach. I think
it might be an appropriate term for it. Some
in the crypto sector view it as even a confrontational
approach and have been quite critical of the...
Securities and Exchange Commission's leadership
under Biden, the SEC leadership is appointed
by the president, who they accuse of having
an approach to sort of constant enforcement.
However, I think obviously on the flip side
of that, the various Democratic politicians
probably argue they're concerned about cases
of fraudulent activity, cases of money laundering,
cases of securities laws being broken by certain
bad actors, I guess we could say within crypto.
And that's the reason for these enforcement
actions. On the Republican side of it, we've
had Donald Trump, who has been extremely vocal
about courting cryptocurrency votes. He spoke
at the Bitcoin 2024 conference earlier this
year saying about he wants to make the US a
Bitcoin superpower. I believe it was his terminology.
If you want to replay that in your head and
his voice, I think it would fit quite well.
And then, well, he said he spoke at the Libertarian
National Convention earlier this year, saying
something like, I'm going to make sure that
the government will never come after all your
Bitcoin. You know, he's been very vocal in courting
the sector. But he also really hates central
bank digital currencies, which is an interesting
one there, because obviously he sees that as
being, as the term suggests, just far too centralized.
And I think, you know, it's more in favor of
like the private market. So yeah, sorry, Martin,
I've given you an incredibly long-winded answer
there. But yeah, if Harris gets elected, you
can expect more of the same. If Trump gets
elected, you can expect maybe some, yeah, a
lot of easing off of regulation around private
cryptocurrency holding, I reckon. Okay. That's
interesting. And if I had as many criminal
cases outstanding as... former president, I
would be a bit wary about the tracking that
comes with CBDCs as well. It's perhaps understandable.
Well, Ted, thank you for joining me today to
discuss this. Hopefully by the time we reconvene
next week, there will be an outright winner
in the US election. We might have some of the
problems we saw last time around. But thank
you all for listening. join the iGamingDaily
team for another edition tomorrow. Thank you.