UK Chancellor of the Exchequer John Healey has announced a 5% increase in Machine Games Duty (MGD), offering a welcome relief for the UK gaming sector. Instead of the anticipated drastic increase to 40%, Healey said the duty would rise from 20% to 25% for higher-stakes machines while safeguarding pubs and seaside arcades.
During his budget speech on Wednesday, Healey stated that the additional revenue from this increase would fund increased support for high streets, including business rate relief for businesses in those areas. However, he clarified that Adult Gaming Centres and vape shops would be excluded from this relief.
The cautious optimism surrounding the 5% rise is tempered by industry leaders' concerns about the potential impacts on venue viability. Rank CEO Richard Harris underscored that any increase in machine games duty would escalate operational costs, threatening venue sustainability, potentially leading to closures, job losses, reduced tax revenue, and stunted investment in the sector.
Ahead of the budget announcement, JenningsBet CEO Greg Knight expressed skepticism about the increase. He compared the situation to an airport delay: "It’s a bit like when you’re waiting at an airport and they say you’ve got a three-hour delay, then they revise it to half an hour, and everyone cheers. I certainly don’t think it’s a win. It could be an awful lot worse, couldn’t it, but I’m not celebrating because at the end of the day it’s still going to be a big drain on the industry.”
Paul Willcock, COO of Genting Casinos, shared that the uncertainty of regulatory frameworks has hindered potential investments into the UK gaming landscape. He emphasized that a stable environment is crucial for attracting investment and growth.
The economic burden of the new duty rate could lead to significant venue closures. Sarah Calakovic, regional manager at Buzz Bingo in Kent, indicated that the 5% hike would push many operations into loss-making territory since gaming machines serve as a secondary income source for her venues. Knights noted that several stores might need to close should these tax changes proceed.
Grainne Hurst, CEO of the Betting and Gaming Council, warned that further tax increases would exacerbate the pressure on an already taxed industry, jeopardizing jobs, high streets, and essential funding for British racing.
The Machine Games Duty has been contentious between the government and the gaming industry for some time. The Social Market Foundation (SMF) had proposed a more substantial increase aiming for 40% as a means to mitigate gaming harm while improving public finances. This suggestion had sparked fears within the industry, recalling Healey's predecessor Rachel Reeves' decision to raise remote gambling duty to 40%. Recently, the topic gained traction among MPs, including Alex Bassinger, who called for doubling the MGD. The gaming sector pushed back, arguing that such an increase could endanger up to 16,000 jobs and shut down nearly 1,500 betting shops and 34 casinos.
As operators assess the implications of this latest tax increase, its impact on their businesses and investment strategies remains to be seen.
