Fred Done, the 83-year-old founder of Betfred and the top taxpayer in Britain this year, has sounded the alarm about the potential repercussions of increased taxation on the gambling sector. In a recent interview with the Financial Times, Done expressed concerns that tax hikes could lead to a significant number of betting shop closures, adversely affect associated industries like horse racing, and further diminish high street retail outlets.
Currently, Betfred operates around 1,094 retail locations throughout the UK. Done underlined the stark threat posed by the proposed increase in Machine Gaming Duty, which may rise from 20% to 40%, as under consideration by Chancellor John Healey for the upcoming Autumn Budget.
Betfred’s retail operations are heavily reliant on fixed-odds betting terminals (FOBTs) and in-shop gambling. Despite a maximum stake limit reduction to £2 in 2019, these FOBTs contribute approximately half of the company's retail shop profits. Done articulated that the absence of these machines would make retail betting "impossible."
The potential tax hike could have devastating effects on Betfred, with Done estimating that it would force the company to close 495 shops within a year, resulting in the loss of 2,575 jobs and an estimated £67 million in lost tax revenue for the government.
This year, Betfred has already closed 132 outlets, a direct aftermath of last year's increase in Remote Gambling Duty. Jo Whittaker, the Chief Executive, noted, "We have tried hard to protect all our sites and the colleagues who work in them, but the combined impact of higher employer National Insurance contributions, wage inflation, increases in gambling taxes, and wider economic uncertainty has left us with no choice."
Similarly, Evoke shut down 200 William Hill stores in April for analogous reasons.
Stella David, CEO of Entain, has also raised alarm regarding the potential impact of an MGD increase, estimating an additional £100 million in operational costs if this measure is enacted. In a letter to the UK Prime Minister last week, David stressed the detrimental effects this tax increase would have on local workers and the community. "They are people losing their jobs and communities losing long-established high-street businesses," she wrote.
In his interview, Done characterized these closures as part of a larger trend toward the decline of high street retail businesses. He predicted that by 2030, betting shops could completely vanish. "I believe that by 2030 we will have no betting shops. The high street will be dead. We’ve already worked it out that with the increases in taxes and salaries and other wages, it won’t be worth operating," he asserted.
Betfred is also involved in sponsoring five of Britain's classic horse races, including the Epsom Derby. Done mentioned that the company hasn't yet made a decision on renewing those sponsorships amidst the ongoing tax uncertainties. He cautioned that a decrease in regulated gambling options could drive problem gamblers toward illegal markets.
Done countered allegations of industry "scaremongering" made by Dame Meg Hillier, chair of the Treasury Select Committee, regarding these warnings.
Recently, Burnham dealt another blow to the retail sector by announcing plans to eliminate the "aim to permit" designation for betting shops and requiring that Adult Gaming Centres obtain planning permission to operate.
Done questioned the increasing tax burdens on wealthy UK business owners, saying, "They keep saying those with the broadest shoulders should be paying more tax. Well, how broad do my shoulders have to be? We paid £400 million in taxes as a family last year."
While he expressed a personal reluctance to leave the UK, Done acknowledged that his children might seek more favorable tax environments overseas.
