The Social Market Foundation (SMF), which has been advocating for a doubling of the Machine Games Duty (MGD), is now facing scrutiny following the leak of a draft report that includes candid remarks from its top officials. This controversy comes just days before Chancellor John Healey is set to unveil his Budget on October 28, where an increase in MGD is anticipated.
The draft, published online by Guido Fawkes, a website known for exposing political leaks, contained internal notes that had not been redacted. The document was made available on Tuesday, revealing concerns raised by SMF staff.
In this report, titled "Addressing the harm," initially launched in June, the SMF suggested that MGD on Category B machines should rise from 20% to 40%. This change could potentially generate between £275 million and £458 million annually. iGB reported on the report's release at that time.
One notable comment came from SMF director Theo Bertram, who questioned the justification for asserting that those who might lose their jobs would find new employment. Chief economist Gideon Salutin acknowledged that while there was no assurance that individual workers would secure new positions, he felt confident that national employment would increase.
Bertram also cautioned against exaggerating the connection between MGD and crime. Salutin agreed that the relationship was ambiguous, prompting him to shift the language from causation to correlation. He conceded that increasing the tax would negatively impact bingo halls and seaside arcades but dismissed concerns about a potential rise in black market activities.
The language regarding job losses and closures in the draft was echoed in the final report, which posited that gambling-related crime correlates with the presence of these machines. As of publication, SMF had not released a comment regarding the leaked draft.
Industry leaders quickly reacted to these revelations. Greg Knight, the CEO of Jenningsbet, stated on LinkedIn that the SMF's credibility is in tatters, accusing them of masquerading tax increases as a means to eliminate gambling. Similarly, Carl Templeton-Smith from CTS Retail & Equine Consulting criticized the government’s reliance on research that lacks thorough evidence. Notably, Alex Ballinger MP, who spearheaded a letter signed by 90 Labour MPs pushing for the 40% tax rate, also contributed to the report's foreword.
Helen Walton, founder of G.Games, went so far as to imply that some of the data producers might be aware of its dubious nature yet choose to present it nonetheless.
While the internal comments reflect some challenging of the claims made, they do not indicate any numerical fabrications. The published report acknowledges the potential for job losses due to closures, but it appears that the causal language was adjusted rather than outright rejected.
The SMF is operating in a sensitive environment, particularly regarding their advocacy for tax increases, with the British Gambling Commission weighing in. A spokesperson noted that the internal remarks raise significant questions about the evidence justifying such tax hikes.
As the budget nears, the gambling industry braces for potentially devastating changes following a 40% rise in Remote Gaming Duty earlier this year. The British Gambling Commission has warned that a 40% MGD rate could jeopardize up to 3,800 jobs in casinos, while a report by Regulus Partners predicts that as many as 1,500 betting shops could immediately shut down. The British Horseracing Authority estimates a potential fiscal impact on racing of £92 million annually.
Although some reports indicate that Healey may settle on a 25% increase instead of the proposed 40%, the SMF now faces intensified criticism, armed with new insights just before the Budget resolution.
