Former Paddy Power boss calls for gambling tax hikes to deter harmful betting

The former boss of Paddy Power has called for higher gambling taxes to deter bookmakers from tactics that draw punters into more addictive games, as he said profits across the sector were “exploding”.

Stewart Kenny, who co-founded the betting firm but has become a critic of the industry’s tactics since retiring, also accused firms of “scaremongering” over warnings about gambling tax hikes.

Mr Kenny told MPs on the Treasury Committee: “I really believe that, for the parts of the industry that are the most harm, that you tax higher to disincentivise the bookmakers from sucking you from the sports book into the online casino.”

He said betting firms are drawing people “from the least-addictive product to the most-addictive product” by handing out free spins on their online casino when they make an account to bet on sports.

This was a bigger problem for younger people whose lives could be “destroyed” by problem gambling, he said.

Mr Kenny also rejected claims from gambling firms that higher taxation would affect jobs in the sector and drive more people towards black market betting.

“It is scaremongering,” he told the MPs.

“I was using exactly the same arguments 25 years ago… and betting businesses have exploded in profits.

“I do not see any reason why betting shops or people employed in betting shops should go down because of the tax rises,” he said, adding that he does not foresee punters getting a “bad deal” as a result.

Parent firm Flutter, which also owns Betfair and Sky Bet, told Paddy Power staff earlier this month it was shutting 57 of their betting shops in the UK and Ireland, putting almost 250 workers at risk.

The US-listed company blamed the closures on “increasing cost pressures and challenging market conditions”.

A spokesman for the UK and Ireland also warned that a “higher gambling tax could have a significant impact on jobs and investment across the industry and drive more customers into open arms of unlicensed operators on the illegal, black market”.

William Hill owner Evoke also recently said it was considering “further shop closures” if it is hit by tax increases in the UK.

On Monday, research commissioned by the Betting and Gaming Council found that proposed tax hikes risk the loss of 40,000 jobs and could divert £8.4 billion to the black market.

Mr Kenny, who stepped down from the board of Paddy Power nearly a decade ago, said there are still parts of the gambling industry that he believes can “flourish”.

“I was part of the system, I have huge regrets, but I’m still a believer in the gambling industry being part of the entertainment mix,” he said.

He said disincentivising companies to entice punters towards “highly addictive” online casinos could help them “get back to marketing horse racing and betting on normal events”.

Theo Bertram, director of the Social Market Foundation, which argues the gambling industry should be taxed more, told MPs activities such as horseracing should be protected.

During the committee session he said: “Don’t let the gambling industry pretend to you that sitting on your phone, being addicted to that app and losing thousands of pounds is somehow putting more people in your constituency into work.”