Entain has raised a significant concern in a letter directed towards Prime Minister Andy Burnham regarding the implications of a potential increase in the Machine Games Duty (MGD). This warning precedes the government's Autumn Budget scheduled for October. Stella David, the CEO of Entain, emphasized that an increase in the MGD rate to 40%, effectively doubling it, could lead to numerous betting shop closures and massive job cuts, which in turn might decrease government tax revenues.
Reports from The Financial Times indicate that Chancellor John Healey is considering this tax hike based on recommendations from the Social Market Foundation, which outlined the proposal in a recent report. Prime Minister Burnham had also previously declared plans to eliminate the 'aim to permit' regulation for betting shops, requiring planning permissions for adult gaming centres (AGCs).
In her correspondence, David cautioned that an additional tax hike, following April's increase to 40% on the Remote Gambling Duty (RGD), could escalate retail operational costs for Entain by as much as £100 million annually. This uptick in costs could lead to the loss of approximately 1,470 betting shops and around 15,900 jobs, according to research commissioned by the Betting and Gaming Council in collaboration with consultancy firm EY.
David conveyed the broader consequences of such a tax increase on workers and their communities, stating, "They are people losing their jobs and communities losing long-established high-street businesses. These jobs matter. They matter particularly in communities where good local employment can be difficult to find."
She highlighted that nearly half of Entain’s retail staff are women, with a majority working flexible or part-time hours. Additionally, more than 2,500 of these employees are under 25 years old. The letter argued that the proposed tax hike would directly affect the workers and communities that Labour's "Makerfield Test" aims to protect and could ultimately lead to reduced revenues for the government instead of an increase.
Entain stressed the necessity of its retail operations for local employment and community involvement. The company pointed out that revenue from machine gaming helps sustain these shops outside of major events, contributing around £50 million per year to British horse racing.
The firm warned that a steep MGD increase could drive customers towards the unregulated market, estimating that up to £1 billion in gambling stakes might shift away from regulated operators. They referenced analyses from the Office for Budget Responsibility, indicating that prior gambling tax hikes have resulted in lower-than-expected tax receipts, including a £500 million reduction anticipated for the fiscal year 2029-30. This lost revenue, as noted by David, would potentially benefit the black market.
A report commissioned by Euromat and prepared by Regulus Partners and Helios forecasted that Europe's black market could maintain a compound annual growth rate of 18% from 2019 through 2026, potentially reaching a value of €13 billion by year-end.
Entain expressed its desire to engage directly with government officials to present its concerns and facilitate dialogue between ministers and frontline staff before the final budget decisions are finalized.
Additionally, Entain announced it has begun a consultation process that may lead to the reduction of around 400 roles from its 2,000-strong customer care team in the UK. David stated that this move is part of a broader strategy to enhance operational efficiency and customer experience, aiming to establish centers of excellence across various locations.
She clarified, "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. 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 this year, Entain announced it would eliminate 500 roles globally in its operations and central functions, a step that the company insisted was part of a restructuring initiative led by its new CFO Michael Snape, rather than a direct response to the RGD increase.
Entain had also reduced its Ladbrokes retail estate in Ireland by more than a third in April, following its withdrawal from negotiations concerning the sale of its entire Ladbrokes retail estate. Last week, Bet365 similarly reduced its workforce by over 300 positions in response to the tax increase in the UK.
