The UK government has decided to raise the Machine Games Duty (MGD) from 20% to 25%, a move that is expected to alleviate some concerns in the gaming sector. This 5% increase comes as a relief to many within the industry, who had feared a much steeper hike to 40%, a possibility previously discussed.
During his recent budget speech, Chancellor of the Exchequer John Healey explained that the increase is intended to help fund further support for high street businesses, including providing relief from business rates. He did specify, however, that Adult Gaming Centres and vape shops will not benefit from this relief.
While the 5% increase may seem manageable, industry leaders are approaching the news with caution. Richard Harris, CEO of Rank, expressed concern that any tax hike could lead to increased operational costs, potentially resulting in venue closures and job losses. He pointed out that uncertainty around gambling tax policies had already stifled investments in the sector.
Further voicing industry concerns, Greg Knight, CEO of JenningsBet, compared the news to being at an airport facing delays, where a slight reduction in delay time leads to a temporary sense of relief, but does not signify a complete victory. Knight remarked, “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, echoed these sentiments at a recent event, highlighting the need for a stable regulatory environment to encourage investment in the UK gaming market.
Sarah Calakovic, regional manager for Buzz Bingo in Kent, raised alarms about the financial repercussions of the tax increase, predicting that it could push the business into a loss-making position. She emphasized that while bingo remains the primary source of revenue, the reliance on gaming machines as a secondary income source underscores the potential impact of this increase.
Knight further noted that the tax increase could lead to closures of several retail locations. Grainne Hurst, CEO of the Betting and Gaming Council, reinforced that even a minor tax rise could add stress to an industry already dealing with significant tax burdens, jeopardizing jobs and essential funding for British racing.
The MGD has been a contentious issue between the government and the gaming industry. The Social Market Foundation (SMF) had recommended a substantial increase to the duty to address gaming harm and improve public finances back in June, suggesting a hike to 40%. This proposed increase would have created echoes of past increases in remote gambling duty by former Chancellor Rachel Reeves.
Recently, MP Alex Bassinger had suggested doubling the MGD, a proposal met with resistance from the industry, which argued that such a move could threaten thousands of jobs. Estimates indicated that a doubling could put around 16,000 jobs at risk and lead to the closure of nearly 1,500 betting shops and 34 casinos. As the industry assesses the implications of this latest tax rise, it remains uncertain how they will respond to what many view as a lesser of two evils.
