Entain has sent a significant warning to Prime Minister Andy Burnham regarding a proposed increase in the Machine Games Duty (MGD). In a letter penned ahead of the government’s Autumn Budget scheduled for October, Entain’s CEO Stella David pointed out the potential fallout from plans to double the MGD rate to 40%. Such a hike, she argued, could lead to widespread closures of betting shops and the loss of many jobs, while ultimately diminishing tax revenues for the government.
The Financial Times first reported on the potential MGD increase after Chancellor John Healey reportedly considered raising the tax upon the suggestion of the Social Market Foundation, which included this recommendation in a recent report.
In light of the government's previously announced decision to eliminate the "aim to permit" for betting shops and require planning permission for Adult Gaming Centres (AGCs), David expressed concern about the ramifications of further tax increases.
She detailed that an additional tax hike would significantly inflate the company's retail operating costs by £100 million per year, possibly triggering the closure of 1,470 shops and leading to job losses for up to 15,900 individuals. These figures were developed through a commission from the Betting and Gaming Council in collaboration with consultancy firm EY.
David highlighted the personal impact of job losses on both workers and the communities in which they reside. She wrote, “They are people losing their jobs and communities losing long-established high-street businesses.”
Additionally, she emphasized that a substantial portion of Entain’s workforce consists of women and young people, with over half of its retail employees working in flexible or part-time positions.
The potential increase in MGD would adversely affect the very workers and communities the Labour Party’s “Makerfield Test” aims to protect, David warned, while also jeopardizing revenues rather than boosting them.
Entain also pointed out the critical role its retail outlets play in local economies, asserting that machine gaming revenues contribute significantly to maintaining operations outside of race days, with around £50 million each year funneled into British horse racing.
David cautioned that a surge in MGD could drive customers back to unregulated markets, estimating that up to £1 billion in gambling stakes might migrate to the black market. This aligns with findings from the Office for Budget Responsibility, which noted that previous gambling tax increases have often resulted in reduced expected tax receipts, including a £500 million drop in anticipated income for 2029-30. This anticipated revenue loss, David argued, would end up benefiting the black market instead.
A report commissioned by Euromat and prepared by Regulus Partners and Helios projected that Europe’s black market would sustain a compound annual growth rate of 18% from 2019 to 2026, likely hitting a value of €13 billion by this year’s end.
Amidst these concerns, Entain has requested meetings with government officials to directly communicate its apprehensions and encourage dialogue between ministers and shop staff prior to finalizing budgetary decisions.
In addition to its tax concerns, Entain announced it is conducting a consultation process that may result in the elimination of around 400 positions within its 2,000-strong UK customer care team. David indicated that this restructuring is part of a larger initiative to enhance operational efficiency and customer service, as the company seeks to establish centers of excellence.
The impending changes, she insisted, are essential for ensuring the company remains competitive and financially sustained in a challenging sector. “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,” she stated.
Earlier in the year, Entain announced intentions to cut 500 roles globally across its operations and central functions. The company asserted that these reductions were not a direct response to the HGD hike but rather part of a strategic reassessment led by its new CFO Michael Snape.
Entain has further scaled back its Ladbrokes retail estate in Ireland by more than one-third as it ceased negotiations to sell its entire Ladbrokes retail operations. Recently, Bet365 also laid off more than 300 staff as a consequence of the UK tax increase.
