In a recent announcement, UK Chancellor of the Exchequer John Healey confirmed an increase of 5% in Machine Games Duty (MGD), raising it from 20% to 25% for higher-stakes machines. This decision has prompted a cautious sense of relief within the UK gaming sector, which was preparing for a much steeper rise that could have reached 40%.
Healey, addressing the matter during Wednesday's budget announcement, indicated that the revenue generated from this tax increase would provide support for high-street businesses, including business rate relief. However, he did specify that Adult Gaming Centres and vape shops would not qualify for this relief.
The industry's response is mixed, as the modest increase offers some relief compared to speculated larger hikes, but concerns linger among leaders. Rank CEO Richard Harris pointed out that any increase in MGD adds costs, jeopardizes venue viability, and could lead to closures and job losses, ultimately reducing tax revenue and hindering investment.
Ahead of the budget announcement, JenningsBet CEO Greg Knight acknowledged that while a 5% increase is preferable to a larger jump, it still misses the mark for what the industry needs. "It’s a bit like when you’re waiting at an airport and they say you’ve got a three-hour delay, then they revise it to half an hour, and everyone cheers," Knight remarked. He remained cautious about celebrating, highlighting that the rise could still significantly burden the industry.
Others echoed the sentiment that it’s not solely the increase itself but the broader uncertainty surrounding gambling tax policies that poses a significant challenge. Genting Casinos COO Paul Willcock expressed that the company is keen to invest in the UK but requires a stable regulatory environment to proceed.
Concerns about potential venue closures were raised by Buzz Bingo's regional manager Sarah Calakovic, who explained that a 5% MGD increase could push the company into a loss-making position. Gaming machines serve as a crucial secondary income source, supporting main operations. Similarly, Knight noted that several locations may have to shut down if the MGD increase takes effect.
Grainne Hurst, CEO of the Betting and Gaming Council, reiterated that any further tax hikes could compound the pressures facing an already stretched industry, threatening livelihoods and essential funding for British racing, which heavily relies on gaming revenue.
The MGD, levied on profits from gaming machines in betting shops and arcades, has been a contentious issue between the government and the gaming industry. Earlier discussions led by the Social Market Foundation suggested a larger tax increase to 40% as a method to tackle gaming-related harm and bolster public finances. This proposed hike mirrored previous reforms when Healey's predecessor raised remote gambling duty to 40% from 21%.
The topic gained traction among parliament members, with MP Alex Bassinger advocating for substantial hikes just last week. The gaming sector vehemently opposed these proposals, using modeling from EY to argue that doubling MGD could endanger up to 16,000 jobs and result in the closure of nearly 1,500 betting shops and 34 casinos.
As the sector processes this more modest tax increase, the implications for investment and operational stability remain uncertain.
