Entain has taken a firm stance in a letter directed to Prime Minister Andy Burnham, warning about the significant repercussions that could arise from a suggested increase to the Machine Games Duty (MGD). As the government prepares for its Autumn Budget in October, Entain CEO Stella David expressed concern that raising the MGD rate to 40%, effectively doubling the current rate, may lead to widespread closures of betting shops and considerable job losses, ultimately impacting government tax revenues.
Reports regarding a potential rise in MGD first surfaced in The Financial Times, where it was revealed that Chancellor John Healey is considering this tax increase based on recommendations from the Social Market Foundation.
Prime Minister Burnham had indicated earlier that the government plans to eliminate the “aim to permit” policy for betting shops, alongside requiring amusement arcades (AGCs) to obtain planning permission to operate.
In her correspondence, David warned that another tax hike, coming after the increase to Remote Gaming Duty (RGD) in April, could ultimately escalate the operational costs for Entain's retail sector by £100 million each year. Such a rise might lead to as many as 1,470 betting shop closures, which could translate to about 15,900 job losses, according to data commissioned from the Betting and Gaming Council and consultancy firm EY.
David highlighted that the repercussions would extend beyond mere job losses, significantly affecting local communities. "They are people losing their jobs and communities losing long-established high-street businesses," she stated. She pointed out that for Entain, half of the retail workforce comprises women, with over 50% working flexible or part-time hours. Additionally, more than 2,500 employees are under the age of 25.
The letter argues that this proposed tax increase would negatively affect the very workers and communities that Labour’s “Makerfield Test” aims to protect, possibly resulting in a net loss for the Exchequer rather than an increase in revenue.
Emphasizing the importance of its retail network, Entain argued that machine gaming revenue significantly supports operations outside of racing days and contributes about £50 million annually to British horse racing.
The company cautioned that a sharp increase in MGD might drive customers away from the regulated market, estimating that potentially £1 billion worth of gambling stakes could transition to the black market. Citing analyses from the Office for Budget Responsibility, Entain noted that previous tax hikes had led to decreased expected tax receipts, including a £500 million drop in the forecast for 2029-30.
A report commissioned by Euromat, prepared by Regulus Partners and Helios, estimates that the black market for gambling in Europe has maintained a compound annual growth rate of 18% from 2019 to 2026 and is projected to reach up to €13 billion by the end of this year.
Entain has requested meetings with government officials to voice its concerns and encourage engagement between ministers and shop staff before finalizing budgetary decisions.
In addition to its warnings about MGD, Entain announced that it has initiated a consultation process that might reduce its customer care roles by approximately 400 from its 2,000-strong UK workforce. According to David, this decision is part of a broader strategy to streamline operations, enhance efficiency, and improve customer service through the establishment of centers of excellence across various locations.
David stated, "The proposed changes are being made to ensure our business remains competitive, financially resilient, and well positioned for the future as our sector faces an increasingly challenging operating environment." The decision, she noted, was not made lightly, emphasizing the need to support affected colleagues during this transition.
Earlier this year, Entain revealed plans to cut 500 roles globally across its operations and central functions. The company clarified that these layoffs were not directly in response to the earlier RGD increase but were part of restructuring initiatives introduced by new CFO Michael Snape to improve cost efficiency.
In April, Entain reduced its Ladbrokes retail presence in Ireland by over a third, coinciding with reports suggesting the company had withdrawn from negotiations to sell its entire retail estate. Last week, Bet365 also announced the elimination of more than 300 jobs as a response to the recent tax hikes in the UK.
