UK Chancellor of the Exchequer John Healey announced a 5% increase in Machine Games Duty (MGD) during Wednesday's budget speech, providing what many in the gaming sector will see as relief from previously anticipated tax hikes. The industry had feared a drastic rise of 20 percentage points to 40%, making this decision a surprising turn of events.
Healey stated that the duty would increase from 20% to 25% for higher-stakes machines, while also emphasizing protections for pubs and seaside arcades. He indicated that the additional revenue from this rise would facilitate increased support for high street businesses, including business rate relief.
However, not all stakeholders are optimistic about the move. Richard Harris, CEO of Rank, voiced concerns in a recent trading update, asserting that any increase in machine games duty would elevate operating costs, jeopardize venue viability, lead to closures and job losses, and ultimately diminish tax revenues and stifle investment.
In the days leading up to the budget, JenningsBet CEO Greg Knight expressed his belief that, while a 5% increase is better than the worst-case scenario, it still falls short of what the gaming industry needs. He likened the situation to waiting for a delayed flight, suggesting that the industry cannot celebrate because the increase is, in his view, still burdensome.
Concerns regarding the stability of the regulatory environment were echoed by Paul Willcock, COO of Genting Casinos, who highlighted the company's desire to invest in the UK, contingent on a more stable framework.
Sarah Calakovic, regional manager at Buzz Bingo, pointed out that the new 5% MGD could push her operations into a loss-making situation, particularly as revenue from gaming machines serves as a crucial supplementary income source. Knight also noted that he might have to consider closing several stores due to rising operational costs from the tax increase.
Grainne Hurst, CEO of the Betting and Gaming Council, reinforced these concerns, stating that any further tax increases could place additional strain on an already pressured industry, which could lead to job losses and negatively impact vital funding for British racing.
The MGD has been a contentious issue between the government and the gaming industry for some time. The Social Market Foundation (SMF), a think tank, previously recommended a significant increase to this tax to help mitigate gaming-related harm while enhancing public finances. Early reports suggested the Chancellor was weighing a potential rise to 40%, which would have echoed Healey's predecessor's controversial decision to elevate remote gambling duty to 40% from 21%.
The matter had recently gained traction among members of Parliament, with MP Alex Bassinger advocating for a doubling of the MGD, a proposal that sparked immediate backlash from the industry. The Betting and Gaming Council highlighted reports estimating that such a doubling could endanger 16,000 jobs and result in nearly 1,500 betting shop and 34 casino closures.
How the industry will strategically navigate this rise remains uncertain, with fears that even a modest increase could lead to significant operational challenges ahead.
