The forthcoming increase in Machine Gaming Duty (MGD), set to take effect in April 2027, has raised alarms concerning potential job cuts, the closure of betting shops, and a possible annual loss of £57 million for horseracing.
Following the announcement, major operators reacted positively to the news that Chancellor John Healey would not implement the anticipated doubling of MGD. This news led to a rise in share prices across the sector, much to the relief of investors.
Steve Grech, CEO-EU of Trust Payments, expressed satisfaction with the clarity from the Government regarding the duty increase. He noted the avoidance of the feared 40% rate, while stressing that the 25% duty remains a heavy burden for operators working with slim profit margins. He pointed out that the extended timeline until 2027 allows businesses a chance to revise their pricing, machine selections, and investment strategies. However, he warned that this might lead to a shift towards online platforms, stating, "It’s still a significant increase for operators with tight margins. With the new rate starting in April 2027, businesses have a window to review pricing, machine mix, and investment plans. The worry is that tax will migrate to responsible, regulated online offerings."
In the wake of the announcement, shares of key players like Entain and Rank Group saw increases of around 7%, reflecting investor relief and optimism regarding the industry's ability to adapt.
The Betting and Gaming Council (BGC) decried the MGD hike as "deeply damaging." Grainne Hurst, the BGC's chief executive, referenced independent reports from EY predicting nearly 9,000 job losses and significant risks to about 1,000 betting shops and casinos. She cautioned that such closures could weaken high streets and unintentionally bolster illegal gambling.
Hurst remarked, "This decision is a blow to thousands of workers, businesses, and communities who rely on Britain’s regulated betting and gaming industry."
Entain, a leading player in UK retail betting, also voiced its discontent, estimating that the MGD increase would impose an additional annual cost of approximately £25 million on its operations in the UK and Ireland. CEO Stella David previously expressed her concerns about the potential MGD increase in a letter to Prime Minister Andy Burnham. Although expectations of rising operational expenses had lessened by £75 million annually under the new tax, David continued to stress the negative implications for jobs and local economies, warning that increased taxes could drive customers toward unregulated markets. "These additional tax changes will further compound damage and push more people into the growing illegal market," stated David.
Nicole Garrett, CEO of the Bingo Association, highlighted how the increased tax would hinder future investments in bingo clubs. She stated, "Bingo clubs cannot invest for the future when every Budget brings a fresh tax threat. This tax raid undermines the Government's own pledge to deliver growth in every postcode, with clubs in the Midlands and the North facing the hardest hit."
Garrett pointed to the government's earlier commitment in April to eliminate Bingo Duty and support British bingo, lamenting how this decision appears to take that support away and jeopardize hundreds of jobs.
Mark Renshaw, CEO of Spotlight Sports Group, publisher of the Racing Post, discussed the far-reaching consequences for horseracing, noting that over 600 betting shops have closed or announced impending closures since the last Budget cycle. He estimated that this trend has led to a £17 million decline in levy and media rights contributions to the sport. Renshaw underscored the intertwined nature of horseracing and betting, describing how the entire ecosystem must be sustainable: "Horseracing and betting depend on each other like nowhere else in sport, which is why the whole ecosystem needs to be sustainable, not just one part of it."
Brant Dunshea, Chief Executive of the British Horseracing Authority (BHA), warned about the potential fallout from the MGD increase. Noting that nearly a third of horseracing's £350 million annual funding comes from contributions by high-street betting, he cautioned that the tax increase might result in a revenue drop of up to £57 million annually, which is significantly lower than earlier predictions. Dunshea emphasized that this shortfall could threaten prize money, racecourse operations, jobs, and vital horse welfare initiatives, saying, "This change could prove devastating for the future of our sport." He reiterated the BHA's intention to engage with the Government to address the impacts of this tax policy.
Conversely, the All-Party Parliamentary Group (APPG) on Gambling Reform welcomed the MGD increase along with the elimination of business rates relief for adult gaming centres, advocating for higher taxes on products associated with significant social harm. Co-chair Alex Ballinger MP expressed satisfaction with the government’s commitment to fairer taxation in the gambling industry, emphasizing the need for measures that address the social threats posed by high-risk gambling products.
