The Social Market Foundation (SMF), which is advocating for a significant increase in Machine Games Duty (MGD), is under scrutiny following the exposure of internal comments from its senior staff in a draft report. This development comes at a critical time, just ahead of Chancellor John Healey's Budget announcement set for Wednesday, October 28, when a hike in MGD is anticipated.
The draft report was published online by the political commentary site Guido Fawkes, known for its focus on political gossip and insider leaks. According to the site's founder, Paul Staines, the document was inadvertently released with staff discussions intact.
This report, titled "Addressing the harm," was first launched in June and suggests that MGD on Category B gaming machines should double from 20% to 40%. The proposed increase is projected to generate an additional £275 million to £458 million annually. iGB covered the report's initial launch.
Within the draft, SMF director Theo Bertram questioned the authors' basis for believing that workers who lose their jobs would easily find new employment. Chief economist Gideon Salutin acknowledged that while there is no individual guarantee for job replacement, he maintained that national employment would grow, asserting that the language used was appropriate. On the issue of crime, Bertram cautioned against overemphasizing any direct causal relationship. Salutin responded by clarifying that a definitive causal link was “unclear” and adjusted the claim to indicate correlation. He also conceded that the tax increase would negatively impact bingo halls and seaside arcades while dismissing concerns about a potential rise in black-market activity.
Key phrases from the draft regarding business closures and job losses were also included in the final published report, which states that the machines in question correlate with gambling-related crime.
At the time of publication, the SMF had not responded to iGB’s inquiries for comment.
Members of the industry did not hold back in their criticism of the SMF. Greg Knight, CEO of the retail bookmaker Jenningsbet and a member of the Betting and Gaming Council (BGC) executive committee, publicly declared the SMF to be “discredited,” accusing the think tank of using tax concerns as a cover to push for the abolition of gambling.
Critics pointed out inconsistencies in the claims made. The report already acknowledges that closures could lead to job losses within the sector, and the draft indicates a careful approach to softening the causal assertions, rather than admitting a complete lack of evidence.
Carl Templeton-Smith of CTS Retail & Equine Consulting criticized Westminster’s reliance on unvetted research, remarking that it reflects poorly on the policymaking process. His comment is notably relevant given that Alex Ballinger MP, who pushed for the 40% MGD rate in a letter signed by 90 Labour MPs, is credited with writing the foreword of the report.
Helen Walton, the founder of G.Games, suggested that some individuals involved in the data's creation and application might be aware of its dubious nature yet choose to present it nonetheless.
While the internal feedback revealed in the Guido Fawkes publication showcases challenges to various claims, it did not indicate any fabricated figures.
A BGC spokesperson told City AM that the leaked comments raise significant concerns regarding the validity of the evidence supporting proposed tax increases.
As the industry prepares for a potentially tough Budget, following the Remote Gaming Duty increase to 40% in April, the BGC warns that a 40% MGD rate could jeopardize up to 3,800 casino jobs. Additionally, Regulus Partners estimates that around 1,500 betting shops may be forced to close immediately, while the British Horseracing Authority predicts that racing could suffer an annual cost of £92 million.
Reports suggest that Healey might consider setting the MGD at 25% instead of 40%. Regardless of the outcome, supporters of the SMF may argue that the internal comments demonstrate a thorough editorial process, while critics now have new ammunition ahead of the Budget discussions.
