UK industry split on whether reported 5% Machine Games Duty rise is a win ahead of budget

Ahead of the UK autumn budget on 28 October, the gambling retail sector is awaiting the chancellor's decision on Machine Games Duty (MGD) for Category B gaming machines. A rise in some form is widely expected after months of speculation, according to iGaming Business.

In June, the Social Market Foundation think tank called for MGD to double from 20% to 40%, saying this would raise between £275 million and £458 million and address the higher risk of harm from these machines. The Betting and Gaming Council commissioned research that reportedly found up to 16,000 jobs, 1,500 betting shops and 34 casinos could be at risk, and that the Treasury could collect £124 million less in tax because of closures. The Times has since reported that the chancellor, John Healey, has settled on a smaller 5% increase.

Many in the industry have treated that as a relief, but not everyone sees it as a victory. Greg Knight, CEO of retail operator JenningsBet, compared it to an airport delay being cut from three hours to half an hour, and said it would still be a big drain on the industry. He expects he would probably have to close a handful of stores. Lawyer Simon Zinger called the figure a win only relatively speaking, since any extra tax would be counterproductive.

Financial consultant Andrew Bowden estimated that, with no closures, a 5% rise would bring in about £120 million, well short of the SMF's projections. He calculated that each betting shop closure would cost the government £155,000 in combined tax, so 280 closures would erase the net gain from betting shops. The BBC reported that bingo halls and arcades have warned of closures, and Buzz Bingo said 40% of its clubs would be pushed into loss-making territory.

Zinger also predicted an enforcement spike in 12 to 24 months, as operators that cut compliance and responsible gambling measures to protect margins face fines. He suggested online-only challengers such as Midnite and Mr Q, which have no retail exposure, could benefit from higher retail costs weighing on larger rivals.

Questions also remain over the evidence behind the policy. A draft of the SMF's June report was accidentally published with senior staff comments attached, questioning whether job-loss claims were overly optimistic and admitting the authors could not be sure how the industry would respond.