The Social Market Foundation (SMF) is facing criticism following the leak of a draft report that prompts questions about its assertions regarding job losses tied to the proposed increase in Machine Games Duty (MGD). This comes just ahead of Chancellor John Healey's upcoming Budget announcement on 28 October, where a rise in MGD is anticipated.
The draft surfaced online on Tuesday, published by the political news website Guido Fawkes, known for spilling inside details on Westminster matters. According to the site, the document was unintentionally shared along with unedited internal comments from SMF staff.
The report, titled "Addressing the harm," was unveiled in June and advocates for increasing MGD on Category B machines from 20% to 40%. This change could potentially generate between £275 million and £458 million annually, a topic that was previously detailed in iGB’s coverage of the report's launch.
Internal commentary from SMF director Theo Bertram raised doubts about the foundations for the claim that workers losing jobs in the sector would find new employment elsewhere. Chief economist Gideon Salutin responded, acknowledging that while there was no guarantee for individual workers, he asserted that overall national employment would increase, maintaining confidence in the wording of the draft.
In comments concerning the relationship between gambling and crime, Bertram cautioned against making exaggerated claims, to which Salutin countered by indicating that a direct causal link was not evident, leading him to modify the language from causation to correlation. He conceded that the tax hike would adversely affect both bingo halls and seaside arcades but downplayed concerns about a potential migration to illegal gambling operations.
Phrases mentioned in the draft regarding closures and job losses were also reflected in the final report, which asserts a correlation between gambling machines and gambling-related crime. As of the report’s publication time, SMF had not issued a comment to iGB.
The industry has reacted quickly, with Greg Knight, CEO of Jenningsbet and a member of the Betting and Gaming Council (BGC) executive committee, publicly criticizing the SMF for being "totally discredited" and claiming the think tank used taxation as a guise for pushing toward the abolition of gambling.
Critics argue that not all claims are substantiated. While the final report acknowledges potential job losses due to closures in the gaming sector, the draft indicates a shift in phrasing rather than a complete lack of evidence.
Carl Templeton-Smith of CTS Retail & Equine Consulting also criticized the approach taken by policymakers, suggesting that reliance on this research without thorough evidence review is alarming. This remark is especially poignant given that Alex Ballinger, the MP who spearheaded a letter from 90 Labour MPs advocating for a 40% MGD rate, also wrote the forward of the report.
Helen Walton, founder of G.Games, suggested a more serious concern, arguing that some contributors to the data may realize its inaccuracies yet choose to present it as valid anyway.
Despite the challenge to its claims posed by the leaked comments, the SMF has not had any indications of fabricating figures in its report.
A spokesperson for the BGC emphasized that the internal comments highlighted by Guido Fawkes raise significant doubts about the validity of the evidence being utilized to propose additional tax increases.
As the industry prepares for what could be another harsh fiscal adjustment, following the Remote Gaming Duty increase to 40% in April, the BGC warns that a 40% rate of MGD could jeopardize up to 3,800 jobs in casinos. Modeling by Regulus Partners suggests that around 1,500 betting shops could be forced to shut down immediately, impacting sectors including horse racing, which could see losses of approximately £92 million annually.
Reports indicate that Chancellor Healey may consider a less severe 25% increase instead of the proposed 40%. Regardless, defenders of the SMF argue that the comments reflect a thorough editorial process, while critics of the organization are now equipped with fresh insights ahead of the Budget deliberations.
