Industry warns of mass closures and job losses from potential MGD hike
Analysis suggests a doubling of Machine Games Duty to 40% could lead to the closure of 4,000 betting shops and threaten the viability of bingo clubs, with the Treasury potentially seeing lower tax receipts as a result.
- A potential increase in Machine Games Duty (MGD) from 20% to 40% is being debated within the UK.
- Consultancy Regulus Partners projects a 40% rate could cause 4,000 betting shop closures and 28,000 job losses.
- Bingo operators also face significant risk, with the CEO of Buzz Bingo stating a 5% MGD rise would make a third of his clubs unviable.
The United Kingdom’s land-based gambling sector is confronting the possibility of a significant tax increase, as discussions continue around a potential doubling of Machine Games Duty (MGD) to 40%. Industry leaders and analysts are cautioning that such a move could have a devastating impact on the viability of high street betting shops and bingo clubs, leading to widespread closures and substantial job losses.
Thousands of closures projected
Analysis conducted by the consultancy Regulus Partners paints a stark picture of the potential consequences. The firm estimates that increasing MGD from its current 20% rate to 40% could result in approximately 4,000 betting shop closures. This would leave only around 1,500 shops operating across the country.
The projected closures would have a severe knock-on effect on employment, with Regulus forecasting that as many as 28,000 jobs could be lost. The analysis also suggests a significant financial blow to British horseracing, which could be deprived of £92 million in funding derived from the retail sector.
The economic model used by Regulus illustrates the fine margins on which many retail outlets operate. According to the firm’s data, an average betting shop generates approximately £440,000 in annual revenue, split almost equally between traditional betting and gaming machines. After accounting for all costs, including staffing, rent, taxes and payments to racing, the net cash contribution of an average shop is around £44,000 per year. A doubling of MGD would add an estimated £45,000 to the average shop’s annual costs, effectively rendering it unprofitable.
Counterintuitively, the Regulus forecast suggests that doubling the tax rate would not lead to a corresponding increase in Treasury income. The firm projects that MGD receipts from betting shops would in fact fall by approximately 32% to £155 million, as the tax base shrinks due to mass closures.
Bingo sector also at risk
The concerns are not limited to the betting sector. The bingo industry has also been vocal in its opposition, with Bingo Association CEO Nicole Barrett recently appearing on BBC Breakfast News to highlight the issue. The fragility of the bingo sector was underscored by comments from Dominic Mansour, the chief executive of Buzz Bingo.
Even a 5% increase in MGD would make a third of his business' clubs unviable.
Speaking to BBC Five Live, Mansour warned of the severe impact that even a comparatively small tax adjustment would have on his estate of clubs. The debate has drawn in numerous senior figures from across the industry, including former British Horseracing Authority chief executive Nick Rust and consultant Vaughan Lewis, founder of Teise Advisory, who recently addressed the topic in The Racing Post. The collective warnings signal a concerted effort by the land-based industry to communicate the economic risks of the proposed tax change.
