The Social Market Foundation (SMF), which is advocating for a significant increase in the Machine Games Duty (MGD), is now under scrutiny following the leak of a draft version of its key report. This document, which included candid remarks from top officials, came to light online just as Chancellor John Healey prepares to unveil his Budget on Wednesday, October 28. Many are now speculating that an increase in MGD is imminent.
The draft was published on Tuesday by Guido Fawkes, a well-known political gossip and news site established by blogger Paul Staines, famous for its revealing leaks that often embarrass political figures. According to Guido, the draft was inadvertently made public along with internal comments from staff.
The report, titled "Addressing the harm," originally launched in June, advocates for the doubling of MGD on Category B machines from 20% to 40%, projecting an increase in revenue of between £275 million and £458 million annually.
Among the internal commentary, SMF director Theo Bertram expressed skepticism about the authors' confidence in the ability of those losing jobs to find new employment. Chief economist Gideon Salutin countered that while there was no guarantee individual workers would secure new jobs, overall national employment would grow. He added that he felt the draft's wording remained appropriate.
On the issue of crime, Bertram cautioned against making unsubstantiated claims about causation, prompting Salutin to adjust the language to emphasize correlation instead. Salutin acknowledged that the proposed tax might negatively impact bingo halls and seaside arcades but dismissed concerns regarding a possible rise in black market gambling.
Though the draft contained phrases concerning job losses and business closures, which also featured in the finalized report, the published version claims a correlation between machines and gambling-related crime.
As the industry reacts, Greg Knight, CEO of Jenningsbet and executive committee member of the Betting and Gaming Council (BGC), wasted no time in condemning the SMF. He stated on LinkedIn that the think tank had "been totally discredited," alleging that it is using the proposal for tax increases as a facade for wanting to eliminate gambling.
Not all assertions hold up against critical analysis. The published report acknowledges that industry closures could indeed lead to job losses, and evidence shows that claims in the draft were revised rather than wholly fabricated.
Carl Templeton-Smith of CTS Retail & Equine Consulting voiced his concerns over political decision-making, commenting on LinkedIn that there is a troubling reliance on poorly scrutinized research. His remarks were pointed, especially given that Alex Ballinger MP, who spearheaded a letter from 90 Labour MPs pushing for a 40% rate, contributed to the report’s foreword.
Helen Walton, founder of G.Games, took it a step further, suggesting that some individuals involved in producing and utilizing the data might be aware of its inaccuracies yet choose to present it nonetheless.
The internal comments released by Guido Fawkes illustrate challenges to specific claims and rewording processes but do not indicate that any figures were fabricated.
A spokesperson for the BGC remarked to City AM that the internal discussions raise significant questions about the evidence backing further tax hikes.
This controversy emerges as the gaming industry braces for another challenging Budget, following an increase in Remote Gaming Duty to 40% in April. The BGC has warned that a 40% MGD could endanger as many as 3,800 casino jobs, while Regulus Partners estimates that around 1,500 betting shops could close immediately. Additionally, the British Horseracing Authority has estimated that the potential impact on racing could reach £92 million annually.
Reports indicate that Healey may consider setting the MGD at 25% instead of 40%. Regardless, supporters of the SMF can argue that the internal comments reflect a healthy editorial process, while critics see new ammunition just ahead of the Budget announcement.
