In an update on its fiscal year 2025/26 results, Rank Group CEO Richard Harris expressed concerns about developments affecting the UK’s retail casino sector. He seemed to reference a recent report by the Social Market Foundation, which advocates for a higher duty on ‘higher-risk Category B electronic gaming machines.’ Harris criticized anti-gambling campaigners for creating negative perceptions surrounding the regulated gambling industry.
This year, the sector has already seen remote gaming duty rise sharply from 21% to 40%. Additionally, new Prime Minister Andy Burnham is pushing to give councils greater authority to impose restrictions on Adult Gaming Centers. In his remarks, Harris labeled betting shops as "dodgy businesses" and likened them to the increasing number of vape shops opening in UK high streets.
He warned that imposing higher taxes could hinder the stability of land-based gambling operators. Harris stated, "Tax proposals from anti-gambling campaigners continue to cast clouds over a regulated industry that is proud to support jobs across the country, deliver great hospitality experiences, and Rank paid over £225 million in taxes and duties last year."
He added, "Tax increases for clubs like ours, with high levels of supervision and operating on tight margins, will swiftly lead to lower tax receipts as much-loved bingo halls and casinos will be forced to close. This impacts customers in local communities. The government has supported bingo clubs like ours in recent years, and any tax increase would detrimentally affect commercial viability."
In terms of financial performance, Rank Group reported a 5% growth in net gaming revenue (NGR), reaching £835 million ($1.13 billion), largely driven by its digital division. Underlying EBITDA rose 15% year-on-year to £138.3 million, while underlying operating profit increased 21% to £78.6 million.
Despite these gains, reported operating profit dropped 7% from £60.1 million to £55.7 million, with significant tax increases contributing to a 23% reduction in profit after tax to £29.9 million. Many of the financial figures included in the report are on a like-for-like basis, excluding the effects of venue openings, closures, foreign exchange movements, discontinued operations, and new markets not yet operational for a full year.
Rank's underlying like-for-like NGR climbed 6% to £834.1 million, and its underlying like-for-like operating profit also rose 20%, from £66.7 million to £79.9 million. The company closed the year with a net free cash flow of £25.5 million, down from £27.7 million the previous year, although net debt improved from £154.7 million to £147.2 million.
The digital segment performed particularly well, with underlying like-for-like NGR increasing 8% to £248.5 million. Revenue from digital operations grew 12% in the fourth quarter, which Rank described as "particularly encouraging" and aided strong profit delivery for the fiscal year.
In its retail venues, the average weekly NGR from Grosvenor casinos rose 5% year-on-year to £7.6 million, with increased customer visits and spend per visit. Rank attributed this growth partially to the rollout of 850 machines across 37 casinos, although performance in table gaming faced challenges due to the conflict in the Middle East.
NGR from Mecca venues grew 4% on a like-for-like basis, despite the closure of nine commercially unviable venues during the year. Looking ahead, Rank noted a positive trading momentum in the first six weeks of the new financial year, with group NGR rising 8% once again led by digital revenues up 10% and Grosvenor gaming machine revenue rising 15%.
On future goals, Rank reiterated its target to surpass £100 million in underlying operating profit in the medium term. However, the company acknowledged that profitability from its digital segment is expected to fall in FY’26/27 due to a near doubling of remote gaming duty. Rank stressed that maintaining the current rate on machine games duty, currently at 20%, is crucial for land-based operations.
They noted that any increase in this rate would further impact the viability of Grosvenor and Mecca venues, likely resulting in reduced tax receipts within a year.
In personnel news, July saw the announcement of Richard Harris as the new permanent CEO, having served as interim CEO since John O’Reilly’s departure in January after nearly a decade in the role. Moreover, Karen Whitworth’s departure from the board was confirmed, while Lucinda Charles-Jones is set to exit following the AGM on October 8. Non-executive director Katie McAlister will temporarily assume Charles-Jones’s role as the chair of the remuneration committee, while Rank plans to appoint Whitworth’s successor as a senior independent director soon.
