Evoke Issues Gambling Tax Warning… But Could MGD Rise Be Capped at 5%?

It’s the talking point that’s giving the shareholders of UK gambling firms sleepless nights: next week’s Autumn Budget.

It was in last year’s announcement that the then chancellor, Rachel Reeves, decimated the industry with her tax grabs on online sports bets and casino games.

Hundreds of betting shop closures and thousands of job cuts – Flutter announcing 1,400 more redundancies just this week – have been the outcome of Reeves’ ill-judged and counter-intuitive decisions.

The Evoke Group, which operates William Hill amongst other brands, has called upon the government to ‘carefully consider’ any repeat in this year’s budget, which will be revealed by the new chancellor, John Healey, on Wednesday.

But good news could be on the horizon, with The Times reporting that the much-rumoured hike of Machine Games Duty (MGD) could be capped at 5%; rather than the 20% previously thought likely.

Real Impact of Higher Taxation

Evoke has been so severely hit by last year’s budget that they’ve decided to sell up: a £234 million deal with Bally’s Intralot has been agreed. They will take over the running of William Hill and co in the coming months, once the necessary due diligence has been completed.

In the meantime, Per Widerstrom – the CEO of Evoke – has urged the government not to further damage the sector with a new tax grab next week. He referenced the mass shop closures caused by last year’s Autumn Budget, which left hundreds of staff members without a job.

Analysts had projected that the increase in tax being paid, with operators facing a 19% increase in Remote Gaming Duty and a 10% hike on General Betting Duty, meant that Evoke would be hit to the tune of £135 million annually.

“The closure of 270 shops over the past year shows the real impact on jobs and livelihoods from higher industry taxation, and we urge the UK Government to carefully consider any further increases ahead of its forthcoming Autumn Budget,” Widerstrom commented.

MGD Uncertainty

The tax hikes have been directly linked to thousands of job losses over the past year, with Flutter chief Kevin Harrington admitting that the regime had left his firm – headlined by successful brands like Betfair and Paddy Power – unable to ‘fully absorb’ the downturn in revenue.

Entain, Bet365 and Betfred are just some of the other major players that have been forced to mitigate, with shop closures and job losses, in the wake of Reeves’ devastation.

Any hike of Machine Games Duty (MGD) would be similarly destructive. Betting Shops, bingo halls, casinos and other venues rely on the revenues generated by the machines, which offer games like slots and roulette to customers with fixed maximum stakes.

The amount of duty paid ranges from 20-25% depending on the machine type, however there are fears that the chancellor could increase that to a flat 40% - a move that would almost certainly result in mass venue closures.

Unexpected Help

Healey, in conjunction with the Prime Minister, have shown little sympathy for the strife facing the gambling sector.

But maybe the human side of job losses, particularly in the run-up to Christmas, has forced the duo to have a rethink of their expected 40% tax levy.

The Times has reported, through an anonymous source, that Healey will only increase MGD by 5%. It’s still going to be impactful and may even cause break-even and small profit venues to close, but a 5% hike is unlikely to wreak the havoc that was otherwise feared.

But we’ll all to have to wait, until the official Autumn Budget reveal on Wednesday October 28 at 12:30 GMT, for the final verdict.