Entain has sent a strong warning to Prime Minister Andy Burnham regarding the potential repercussions of raising the Machine Games Duty (MGD). In a letter from CEO Stella David, the company expressed concerns that doubling the MGD rate to 40% ahead of the government's Autumn Budget in October could trigger significant betting shop closures and massive job losses, while adversely affecting tax revenues for the government.
This proposed increase was first reported by The Financial Times, with Chancellor John Healey reportedly considering the hike based on recommendations from the Social Market Foundation, which has advocated for the raise in a recent publication.
In her correspondence, David highlighted the financial strain the MGD increase could impose on retail operations, estimating an additional £100 million in annual costs. This could lead to as many as 1,470 shop closures and a loss of approximately 15,900 jobs, as backed by data from the Betting and Gaming Council and consultancy EY.
David’s letter also emphasized the broader impact on high-street economies and workers. She wrote, "They are people losing their jobs and communities losing long-established high-street businesses. These jobs matter, particularly in areas where local employment opportunities are hard to find."
Notably, she pointed out that about half of Entain’s retail employees are women, with many working flexible or part-time hours, and over 2,500 of them being under 25 years old. The letter argued that the tax increase would negatively affect the very individuals and communities that Labour's “Makerfield Test” aims to protect, suggesting it could lead to decreased revenues for the Exchequer.
Entain also highlighted the significance of its retail networks in promoting local employment and community relations. The company noted that machine gaming revenues help support shops during non-race days, contributing approximately £50 million annually to British horse racing.
A sharp increase in MGD might cause customers to shift to the unregulated market, with estimates suggesting that up to £1 billion in gambling stakes could transition to the black market. Analyses from the Office for Budget Responsibility indicated that previous gambling tax increases have led to diminished forecast tax receipts, including a £500 million reduction for 2029-30. According to David, these funds would likely flow to illegal operators.
A report from Euromat, prepared by Regulus Partners and Helios, indicated that Europe's black market has seen an annual growth rate of 18% since 2019 and could reach a value of €13 billion by year-end.
Entain stated it has sought meetings with government officials to express these concerns and facilitate discussions between ministers and frontline staff before the budget decisions are finalized.
In addition to its warning regarding MGD, Entain announced the start of a consultation process that may see around 400 customer care positions eliminated from its 2,000-strong UK workforce. David described this move as part of Entain's broader strategy to streamline operations and enhance customer experience, aiming to establish centers of excellence across various locations.
She stated, "The proposed changes are being made to ensure our business remains competitive and financially resilient amid a challenging operating environment. This decision has not been made lightly, and our immediate priority is to support those colleagues who may be affected during this transition."
Earlier, Entain had reported intentions to cut 500 jobs globally across its operations and central functions. The company clarified that this decision was not a direct response to the recent increase in RGD, but rather part of a restructuring plan initiated by new CFO Michael Snape. Previously, Entain had reduced its Ladbrokes retail operations in Ireland by more than one-third in April, indicating a strategic withdrawal from discussions about selling its entire Ladbrokes retail estate. Last week, Bet365 also announced job cuts exceeding 300 in light of the UK tax increase.
