Ex-Pro poker player now lobbying for higher UK gambling taxes

David Gravel October 17, 2024

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Ex-Pro poker player now lobbying for higher UK gambling taxes

Ex-pro poker player Derek Webb epitomises the saying “poacher turned gamekeeper.” The former professional has switched sides and is now campaigning for higher taxes on the very industry he once profited from. As gambling companies brace for a potential rise in taxation, the UK gaming industry and its connected sectors, such as horseracing, stand at a critical crossroads. A recent article by Rob Davies in The Guardian delves deeper into Webb’s motivations.

The poacher’s three-card trick

Multimillionaire Webb made his fortune by outsmarting fellow poker players with strategies that ensured he was, as Davies puts it, ‘rising from the table holding more chips than he started with.’ However, after stepping away from professional gambling, he’s now advocating for tax reforms targeting the gambling industry.

Davies’ article suggests that Webb’s fortune stems from ‘casino companies that dared to mess with the intellectual property rights to Three Card Poker.’ Webb developed this game, sold the rights, and has since made even more through litigation surrounding those rights.

Webb has a vested interest in these reforms, as he is now Labour’s fifth-largest individual donor since the beginning of 2023, having donated around £1.3 million during this time. The Liberal Democrats have also received over £250,000 from Webb to support their campaign for higher taxes on online gambling. Additionally, he supports two influential think tanks—the Social Market Foundation (SMF) and the Institute for Public Policy Research (IPPR)—which are advising the Treasury to raise taxes on the gambling sector by up to £3 billion.

Davies also suggests that other leading voices in the gambling sector see Webb’s ties to the land-based casino sector as a potential motivation for him. These land-based casinos could benefit from the fallout of higher taxes on bookmakers and online casinos. Webb counters this by stating he would ‘oppose any liberalisation of laws on the land-based sector.’

In recent interviews, he has clarified that his motivation is to ensure the gambling industry is held accountable for the harm it causes. His primary focus is on introducing a tax increase that would channel more funds into gambling addiction research, player protection measures, and social welfare programmes. “I’m motivated to try to change the gambling regulatory system,” he says. “I’m a believer in socioeconomic justice.”

The financial fallout for the gambling industry

The former poker pro’s advocacy for increased taxes is part of a broader conversation around the UK’s evolving gambling regulations. With potential tax hikes looming, particularly in the 2024 Autumn Budget, the industry has already felt the effects. According to The Guardian, shares in UK gambling firms fell by over £2 billion amid speculation about higher taxes. These firms, including well-known operators like Flutter Entertainment and Entain, are scrambling to prepare for the financial implications of potential changes.

While aiming to address the societal cost of problem gambling, the proposed tax hikes have different economic impacts across various parts of the gambling sector. In another recent Guardian report ‘Arena Racing CEO Urges Reform to Save Racing from Gambling Tax Fallout,’ by Greg Wood, he quotes Arena Racing CEO Martin Cruddace, who states, “The predilection for gambling-related harm is wildly different between horse-race betting and online casino games, with British horse racing being a world-leading industry that makes a major economic contribution to the country.” The horseracing community shares this sentiment.

In the same article, James Noyes, a senior fellow at the SMF and the report’s lead author, argues that “single pre-event horserace betting is qualitatively different in its relationship to harm from other, high-frequency remote gaming activities such as online slots.” However, he also contends, “For too long, the Betting and Gaming Council (BGC) has conflated the regulation of online slots with the fortunes of horse racing. This has been a deliberate and cynical ploy. By hiding behind horse racing, industry lobbyists have resisted calls to reform online casino gaming.”

Horseracing’s struggle in the face of tax reforms

The ripple effects of the proposed tax hikes on the gambling industry extend far beyond the betting companies themselves. The UK’s horseracing industry, a sector deeply intertwined with gambling, is vulnerable to any financial disruptions caused by changes to gambling taxes. As highlighted in the Greg Wood’s Guardian article, industry leaders have warned that increased taxation could lead to a funding shortfall that would threaten the sport’s survival.

Horseracing relies heavily on revenue generated by gambling activities, and any decline in gambling turnover because of higher taxes could cause significant financial strain. This loss would not only affect the racing industry but also the thousands of jobs dependent on it.

Webb’s transition from an ex-pro poker player to lobbying reflects a broader shift in public perception of gambling in the UK. The ex-poker pro is not just reading the table, but also embracing the shift in public perception, driven in part by high-profile cases of gambling-related harm and criminal behaviour. These cases have resulted in heightened scrutiny of the industry’s efforts to regulate itself.

Self-regulation has long been a contentious issue in the gambling industry, with critics arguing that it has failed to protect vulnerable individuals. This perceived failure has prompted calls for greater government intervention, including tax hikes to fund addiction treatment and research.

Is Webb’s poker face a gamble on the economy?

The proposed tax hike is part of a larger conversation about the role of gambling in the UK economy. As companies brace for tighter regulations, the question remains: can the industry continue to thrive under increased scrutiny and higher taxes? The answer could have far-reaching implications, not just for operators but also for shareholders, employees, and the broader economy.

Webb argues that the tax increases are not only necessary but also inevitable. His rationale is that if companies profit from something that has the potential to ruin lives, they should contribute to addressing the problem. Stock market reactions have already been volatile.

Striking a balance

As the UK government moves closer to the Autumn Budget, the challenge will be to strike a balance between protecting individuals from the harms of gambling and ensuring that the industry can continue to operate profitably. The coming months will be critical for both the gambling and horseracing industries as they navigate the fallout from potential tax increases.

In the end, the debate over the UK’s gambling tax rise is not just about numbers—it’s about people’s livelihoods, the future of beloved industries like horseracing, and the broader impact on the UK economy. For the former ‘poacher turned gamekeeper,’ the stakes have never been higher.

You can read Rob Davies’ Guardian article in full here.

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