UK Chancellor of the Exchequer John Healey has revealed a 5% increase in Machine Games Duty (MGD), a move that is likely to provide some relief to the UK gaming sector. This decision comes as a welcome surprise to an industry that had anticipated a larger increase, initially fearing a jump in duty to as much as 40%.
During his budget announcement on Wednesday, Healey stated he would be raising MGD from 20% to 25% for high-stakes machines, while also assuring that pubs and seaside arcades would be protected from this increase. He outlined that the additional revenue would be used to support high streets, including offering business rate relief to high street businesses. However, he noted that Adult Gaming Centres and vape shops would be excluded from this relief.
While a 5% increase is significant, industry leaders remain cautious. Richard Harris, CEO of Rank, highlighted that any hike in MGD would lead to increased operational costs, reducing the viability of venues and potentially resulting in closures and job losses. He mentioned that uncertainty surrounding future gambling tax policies had already stalled investment in the sector.
Prior to the budget, Greg Knight, CEO of JenningsBet, indicated that while a 5% increase is preferable to larger hikes, it still falls short of what the industry desires. He likened the situation to receiving a revised travel delay at an airport: it’s an improvement, yet not a cause for celebration.
Paul Willcock, COO of Genting Casinos, pointed out that what affects investment is not just the tax increase but the instability in regulatory frameworks. He expressed a keen interest in investing in the UK, contingent upon a more stable environment.
Sarah Calakovic, regional manager at Buzz Bingo, warned that a 5% increase in MGD could push around 40% of their operations into loss-making territory, as gaming machines serve as a secondary income source. Knight echoed these concerns, stating that some stores might have to shut down as a consequence of the tax rise.
Grainne Hurst, CEO of the Betting and Gaming Council, reiterated that any further tax increases would exacerbate pressures on an industry already grappling with significant tax hikes, jeopardizing jobs and essential funding for British racing.
The MGD, which taxes profits from gaming machines in betting shops and arcades, has sparked heated debate between the government and the gaming industry. A report from the Social Market Foundation (SMF) earlier this year proposed a much higher duty, intending to alleviate gaming harms while enhancing public finances. This prompted speculation that MGD could rise to 40%, reminiscent of previous significant hikes, such as the remote gambling duty increase by Healey’s predecessor, Rachel Reeves.
As the topic sparked discussion among MPs, calls for a doubling of MGD were led by Alex Bassinger. The industry pushed back against such proposals, stressing the potential human cost, with predictions indicating that doubling the duty could threaten up to 16,000 jobs and force the closure of nearly 1,500 betting shops and 34 casinos.
How the industry will navigate this latest development remains uncertain, as it finds itself facing a lesser of two evils in the form of a 5% tax increase.
