On Wednesday, leaders from the UK's casino industry raised alarms over the potential increase of machine games duty (MGD), warning that a doubling of this tax, alongside broader economic challenges, could destabilize investments and jeopardize jobs just as the sector aims to modernize.
During a panel discussion held at the Hippodrome Casino in London, notable figures from major operators including Rank Group, Genting Casinos, and the Hippodrome were joined by members of the Night Time Industries Association (NTIA) and consultancy Regulus Partners to discuss these pressing concerns.
Richard Harris, CEO of Rank Group, articulated the challenges posed by escalating taxes, stricter regulations, and increased operational costs. "In my four and a half years, we’ve closed four of our venues," Harris noted, attributing these closures to a difficult financial landscape. He emphasized that a combination of high overheads, rising taxes, and tighter regulations has severely impacted profitability and cash flow.
The uncertainty surrounding potential tax increases has already influenced investment choices, according to Harris. This sentiment was echoed by Paul Willcock, the COO of Genting Casinos, who stated that the looming MGD hike is "keeping us all awake" at night.
Proposals to elevate the MGD from 20% to 40% emerged a few months ago from the think tank Social Market Foundation and are reportedly being considered in the government's upcoming autumn budget. The casino sector has expressed strong opposition to these recommendations, asserting that such a tax increase would harm their retail operations.
In a statement made in September, Fred Done, owner of Betfred, warned that a rise in tax could force his company to shut down 495 shops within a year, resulting in the loss of 2,575 jobs and an estimated £67 million in lost tax revenue for the government.
"If we can get some relaxation or at least certainty on that, then investment will flow," Willcock told attendees. He reiterated Genting’s commitment to global investments, highlighting that the company has poured $5 billion into developments on the Las Vegas Strip over the last five years, alongside $5 billion in New York and $3 billion in Singapore. "Genting is itching to invest in the United Kingdom," he asserted.
Simon Thomas, executive chairman of the Hippodrome, emphasized the need for operators to have confidence in the stability of the regulatory and financial climate over the typical investment periods of three to seven years. Harris agreed, stating that "profit is the source of future investment" and that consistent conditions enable operators to effectively generate and utilize profits.
The panel expressed support for the Gambling Commission's 2025 land-based modernization reforms, which expand the number of slot machines permissible in casinos from 20 to as many as 80 and relax related betting regulations. Harris noted that Rank Group has increased its machine inventory by about 65%, growing from 1,400 to 2,250 machines, following an investment of £15 million in a single venue driven by these reforms. However, the participants cautioned that while these changes could yield benefits, they need time to materialize, and the stability of taxes must accompany any regulatory loosening.
Dan Waugh, a partner at Regulus Partners, highlighted the need to evaluate whether these reforms have genuinely enhanced customer experience and broadened appeal, asking, "Are these better places to go to as a result of the regulated reforms?"
The panel identified a projected investment pipeline of around £200 million in the casino sector over the next few years. NTIA CEO Michael Kill underscored the extensive economic benefits of ongoing casino investments, which could bolster high streets, nightlife, employment, and local supply chains.
According to a report from NTIA discussed during the panel, a significant 58% of respondents indicated that casinos were their primary reason for visiting an area, with 55% stating they likely would not have visited without the casino.
However, should the MGD rate rise, the NTIA estimated job losses could total around 3,800 nationwide, as a survey of 23 operators revealed that 95.7% would reduce staffing levels and 91.3% would cut investments in venues, with 60.9% indicating they might close a venue altogether.
Participants emphasized the significant role casinos play as employers and community contributors. Willcock noted Genting employs about 3,500 individuals in the UK, detailing the rigorous training involved before employees work in casino settings. "There’s significant training, six weeks training before anybody can go anywhere near a casino table," he explained.
Various panelists elaborated on the positive societal impacts of casinos, including improving perceptions of safety in town centers during the late-night hours and offering venues for community gatherings. Kill remarked on an often-overlooked aspect: "People coming after midnight actually felt safe because of the service levels, because of the engagement, the lighting, etc."
The panelists collectively urged the government to allow its 2025 reforms to take root without imposing immediate additional tax increases. Kill advocated for "a chance to bed in" these reforms, asserting that casinos are essential to a thriving 24-hour economy.
Both Willcock and Harris stressed the need for a clear and stable fiscal framework to encourage substantial new investments. Waugh cautioned against policies motivated excessively by public health considerations, suggesting a balanced approach that safeguards consumers while fostering sustainable business growth. Recently, Regulus Partners released an analysis projecting that the horse racing industry could lose around a third of its annual income—totaling £92 million—if the MGD is increased.
