Investing.com — Shares of major UK gambling firms Entain (LON:ENT) and Flutter Entertainment (LON:FLTRF) (NYSE:FLUT) fell following reports that the government is considering significant tax hikes on the gambling sector. 

At 4:57 am (0857 GMT), Entain and Flutter Entertainment were trading 12.6% and 7.3% lower, respectively.

As per media reports, Treasury officials are exploring proposals to raise between £900m and £3bn by increasing taxes on online casinos and bookmakers as part of Labour’s upcoming budget. 

The potential move is seen as part of efforts to address a £22bn shortfall in the public finances.

Two think tanks, including the Institute for Public Policy Research, have suggested doubling taxes on “higher harm” products like online casino games, which could generate up to £2.9bn next year. 

Another proposal from the Social Market Foundation advocates for a more moderate increase in online gambling taxes from 21% to 42%, raising an estimated £900m.

The Betting and Gaming Council has lobbied against these potential increases, warning that higher taxes could drive consumers towards unregulated gambling markets. 

However, the Treasury has not yet made a final decision, though it is reportedly receptive to the proposals. The outcome could be confirmed in the budget announcement later this month.