The Social Market Foundation (SMF), a think tank advocating for a significant increase in Machine Games Duty (MGD), is currently under scrutiny following the leak of a draft report that includes candid feedback from its senior management. The emergence of this draft comes at a particularly sensitive time, just ahead of Chancellor John Healey's Budget announcement scheduled for Wednesday, October 28, amid widespread expectations of an MGD increase.
The draft was revealed on Tuesday by the political website Guido Fawkes, known for its insider scoops and leaks. According to the site, the document was accidentally released with internal comments still attached.
This report, titled "Addressing the Harm," was published in June and advocates for MGD on Category B machines to jump from 20% to 40%. This would potentially raise revenue estimates between £275 million and £458 million annually, a matter previously covered by iGB.
In the margin of the draft, SMF director Theo Bertram questioned the basis for the authors' confidence that those losing their jobs could find new employment. Chief economist Gideon Salutin acknowledged that there was no assurance for individual workers but maintained that national employment would increase, asserting that the wording was appropriate. On the topic of crime, Bertram cautioned against overstating its connection to gambling, to which Salutin replied that the causal link was unclear, leading him to revise the text to suggest correlation instead. He further accepted that the tax could adversely affect bingo halls and seaside arcades, and downplayed concerns over a potential rise in black market gambling.
Phrases from the draft concerning job losses and closures were echoed in the published report, which suggests a correlation between certain machines and gambling-related crime.
As the SMF faces backlash, industry leaders are expressing their discontent. Greg Knight, the CEO of retail bookmaker Jenningsbet and a member of the Betting and Gaming Council (BGC) executive committee, stated on LinkedIn that the SMF has lost credibility, accusing it of using taxation as a distraction to reduce gambling activities.
Some claims in the report already acknowledge that closures could indeed lead to job losses in the industry. The draft reveals a shift in how causal claims were presented, yet there is no evidence indicating that figures were fabricated.
Carl Templeton-Smith of CTS Retail & Equine Consulting criticized the policymakers, noting that reliance on research without thorough evidence examination illustrated significant flaws in the decision-making process. Alex Ballinger MP, who spearheaded a letter from 90 Labour MPs pushing for a 40% MGD rate, also contributed to the report.
Helen Walton, founder of G.Games, raised further alarm, suggesting that some data creators are aware that their statistics are fabricated but choose to use and present them anyway.
The internal remarks from Guido Fawkes invite serious questions about the validity of the arguments used to propose tax increases, as noted by a BGC spokesperson.
This controversy arises as the gaming industry prepares for a potential second consecutive hit from the Budget, following the Remote Gaming Duty hike to 40% in April. The BGC has indicated that a 40% MGD could jeopardize approximately 3,800 jobs within casinos. Additionally, modeling from Regulus Partners predicts that around 1,500 betting shops could close immediately, while the British Horseracing Authority estimates the impact on racing at £92 million annually.
Reports suggest that Healey might ultimately opt for a 25% increase instead of the anticipated 40%. Regardless, the leaked comments empower the SMF’s critics as they head into Budget week, while supporters may argue that the internal commentary illustrates a necessary editorial process.
