The think tank advocating for a significant increase in Machine Games Duty (MGD) is under scrutiny following the online leak of a draft report that includes candid remarks from its leadership. The Social Market Foundation (SMF) is facing a challenging moment, as Chancellor John Healey is set to announce his Budget on October 28, with expectations of a rise in MGD looming over the industry.
The draft was shared via Guido Fawkes, a political news site known for exposing embarrassing leaks. The unfortunate timing of this leak adds pressure to the SMF as the report in question, titled "Addressing the Harm," originally launched in June, advocates for doubling the MGD on Category B machines from 20% to 40%. This move is projected to yield between £275 million and £458 million annually.
Notable comments within the draft reveal internal doubts regarding job losses. SMF director Theo Bertram questioned the basis for the authors' confidence that those who could potentially lose their jobs would find new employment. Chief economist Gideon Salutin acknowledged there was no certainty for individual workers but insisted that, on a national scale, employment would grow, stating he believed the language used in the report was adequate.
On the issue of crime, Bertram cautioned against exaggerating the connection, to which Salutin responded by softening the claim from a causal link to stating a correlation instead. He recognized that the tax increase would adversely affect bingo halls and seaside arcades but dismissed concerns about a possible rise in black-market gambling.
The draft's language regarding closures and job losses matches the final report, which claims a correlation between machine availability and gambling-related crime. At the time of publication, the SMF had not responded to inquiries from iGB for comments on the leaked draft.
The industry reacted quickly to this revelation. Greg Knight, CEO of Jenningsbet, criticized the SMF on LinkedIn, claiming it has been discredited and accusing it of using the tax discussion to pursue a prohibition on gambling. Carl Templeton-Smith of CTS Retail & Equine Consulting described the situation as a serious failure in policymaking, particularly criticizing MPs for relying on research without thorough examination of the evidence.
Furthermore, Helen Walton, the founder of G.Games, went so far as to suggest that some in the think tank believed they were presenting fabricated data.
While the comments in the leaked draft show challenges and rewordings, they do not indicate any fabricated figures. However, the published report acknowledges that closures could indeed result in job losses, and the draft reflects a strategic shift in claims rather than evidentiary admission.
Given the SMF's push for higher taxes, such revelations afford critics new ammunition. The British Gambling Commission also weighed in, stating that the comments shared in the leak raise significant questions about the validity of evidence used to advocate for tax increases.
As the industry braces for another budgetary impact following a recent rise in Remote Gaming Duty to 40%, the British Gambling Commission has cautioned that a MGD increase to 40% could endanger around 3,800 casino jobs. Modeling by Regulus Partners indicates that up to 1,500 betting shops could shutter immediately, and estimates from the British Horseracing Authority suggest a potential £92 million annual loss for racing.
There are indications that Healey may opt for a less drastic 25% increase rather than the full 40%. Regardless of the final decision, the internal comments from the SMF provide its critics with a compelling argument as the Budget announcement approaches.
