Entain has raised alarms in a letter to Prime Minister Andy Burnham regarding the proposed increase in the Machine Games Duty (MGD).
As the government gears up for its Autumn Budget in October, Entain's CEO Stella David cautioned that a hike in the MGD rate—potentially doubling to 40%—could lead to widespread closures of betting shops and substantial job losses while actually cutting tax revenues for the government.
The potential increase was first reported by The Financial Times, with Chancellor John Healey reportedly considering the proposal based on recommendations from the Social Market Foundation, which advocated for the tax rise in a recent report.
In his announcement, Prime Minister Burnham indicated that the government plans to abolish the "aim to permit" policy for betting shops, adding that Adult Gaming Centres (AGCs) will require planning permission to operate.
In her letter, David warned that the proposed tax increase, on top of the earlier rise in Remote Gaming Duty (RGD) to 40% of Gross Gaming Revenue (GGR) effective April, could add £100 million annually to Entain's retail operational costs. This could result in around 1,470 shop closures and the loss of up to 15,900 jobs, based on figures commissioned from the Betting and Gaming Council and consultancy firm EY.
David emphasized the serious implications a tax rise would have on both high street employees and communities. “They are people losing their jobs and communities losing long-established high-street businesses,” she stated. “These jobs matter. They matter particularly in communities where good local employment can be difficult to find.”
Notably, David revealed that half of Entain’s retail workforce consists of women, with over half working flexible or part-time hours. Additionally, more than 2,500 employees are under the age of 25.
The letter articulated that the tax increase would adversely affect the workers and communities that Labour's “Makerfield Test” aims to protect, potentially costing the Exchequer rather than contributing to it.
Entain underscored the critical role its retail networks play in fostering local employment and community involvement. It highlighted the significance of machine gaming revenue in sustaining shops outside of race days, which aids local economic activity, including about £50 million annually directed towards British horse racing.
The company cautioned that a substantial increase in MGD could lead customers to turn to the unregulated market, estimating that up to £1 billion in gambling stakes might shift to illegal operations. Analyses by the Office for Budget Responsibility indicated that previous gambling tax hikes had, in fact, diminished expected tax revenues, including a £500 million reduction forecasted for 2029-30, which would benefit the black market.
A new report commissioned by Euromat, and prepared by Regulus Partners and Helios, estimates that Europe’s black market has experienced an annual growth rate of 18% from 2019 to 2026 and could reach up to €13 billion by year’s end.
Entain has requested meetings with government officials to directly express its concerns and foster dialogue between ministers and front-line shop employees before final decisions are made regarding the budget.
In addition to its warnings regarding MGD, Entain announced a restructure aimed at reducing its customer care team by around 400 roles from its UK staff of 2,000. David noted that this restructuring is part of a larger initiative to streamline operations, enhance efficiency, and improve customer service, with the goal of establishing centres of excellence across various locations.
“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,” stated David. “This decision has not been made lightly and our immediate priority is to support those of our colleagues who may be impacted through this transition.”
Earlier in the year, Entain had announced plans to eliminate 500 roles globally across its operations and central functions. The company made clear this move was not a reaction to the RGD increase but part of a restructuring and cost-cutting strategy led by new CFO Michael Snape.
At that time, Entain emphasized, “As part of our ongoing focus on enhancing Entain’s operational efficiency and agility, we have begun implementing organisational changes which will regrettably impact a number of roles across the group over the months ahead.”
In another significant development, Entain reduced its Ladbrokes retail presence in Ireland by more than one third in April and reportedly withdrew from discussions to sell its entire Ladbrokes retail estate.
Recently, Bet365 also announced the elimination of over 300 jobs in reaction to the UK's tax increase.
