Industry Slams ‘Job Killer’ Gambling Tax Hike as Rank Reports £9m Hit

The fall-out from the UK government’s Autumn Budget is still being dissected by gambling industry stakeholders.

And while there was a general sense of relief that the hike in Machine Games Duty (MGD) was capped at 5%, further examination of the tax increase reveals a new and potentially damaging struggle for the sector.

One industry insider described the MGD adjustment as a ‘job killer’, while the Rank Group – who operate Grosvenor Casino, Mecca Bingo and other brands – have warned shareholders of an annual hit to revenues of around £9 million.

Hidden deep within the Budget documents was a legal change to how free spins, offered by online casinos, are going to be taxed from hereon.

The Job-Killing Autumn Budget

Although the level of MDG varied from one machine type to the next, the majority were taxed at 20% prior to the Autumn Budget.

Anti-gambling campaigners, and even high-profile individuals like the former Prime Minister, Gordon Brown, had called for the rate to be hiked to 40%.

And so the new rate of 25% was seen as a relative victory, even if the reality is that millions will be wiped off the value of betting firms – with serious consequences for British horse racing as well.

Punitive Raid on the Industry

Most at risk are high street venues like betting shops, casinos and bingo halls, which lean on their games machines for a valuable source of revenue. Estimates suggest that as many as 1,000 premises could be closed as a result of John Healey’s budget – hence the ‘job killer’ comment made to City AM, which could particularly impact the younger generation typically employed in the retail environment.

That industry source described the tax grab as a ‘punitive raid’ on the gambling sector, while Betting and Gaming Council chief Grainne Hurst commented that it was a ‘deeply damaging decision’ on the part of the government.

“The Chancellor has ignored repeated warnings about the consequences,” she warned.

Operators Feel the Pinch

Although there’s only speculation as to the true cost of the latest gambling tax increase, the Rank Group and other betting operators have already begun to put a number on it.

The Grosvenor Casino owner has warned of an annual tax bill that is increased by £9 million, which they will need to mitigate – sparking fears of venue closures. Further information will be provided in their half-year results, which are published in January.

The share price of the UK’s leading betting operators rose on Wednesday in the aftermath of the budget, but that has raised little cheer from the likes of Entain and Evoke.

Indeed, Entain has estimated that the impact of the MGD hike will cost their retail empire £25 million a year, with that dreaded word – mitigation – used to describe the likelihood of shop closures and other cost savings.

They expect to offset the tax rise by the end of 2028, but it will be a bumpy road getting there. Entain chief executive officer Stella David commented: “Our priority is to protect jobs wherever possible while supporting a sustainable retail presence on UK high streets.”

New Tax Amendment for Free Spins

Earlier in October, Jumpman Gaming won a landmark High Court case in which they successfully argued that the revenues generated from a free spins promotion should not be taxed.

The panel agreed… saving the operator a tax bill of some £13.2 million.

Stung by the loss, the UK government has moved to ensure there’s no repeat by rewording the relevant legislation – a detail buried in the supporting documents to the Autumn Budget.

Now ‘free plays’, as they were known before, have been renamed ‘restricted plays’, with the likelihood that these will now be liable for Remote Gaming Duty (RGD).