Rank Group warns of mass casino and bingo closures if rise in Machine Games Duty goes ahead
The owner of Mecca Bingo and Grosvenor Casinos says it may have to close around a third of its venues if MGD is hiked significantly.
Key takeaways:
- Casino operator Rank Group has warned that a rise in Machine Games Duty from 20 to 40 per cent could force the closure of around a third of its venues and put about 2,000 jobs at risk.
- It says it’s already closed nine bingo halls over the past year due to rising expenses and weaker consumer spending.
- The sector has already faced cost pressures, including tax increases and higher employment costs.
UK.- Rank Group has warned that a significant increase in gaming machine taxes could force the closure of around a third of its venues and put approximately 2,000 jobs at risk. The operator, which owns Mecca Bingo and Grosvenor Casinos, said many of its sites would become financially unsustainable if the UK government adopts a proposal to double Machine Games Duty (MGD) in Britain from 20 per cent to 40 per cent in the Autumn Budget.
Machine games duty is levied on profits generated by fruit machines, roulette terminals and other gaming machines. While operators currently pay tax at a rate of 20 per cent, the Social Market Foundation and former prime minister Gordon Brown have suggested the Treasury could raise an additional £450m by increasing the rate to 40 per cent. It’s been confirmed that chancellor John Healey is considering the proposal.
Rank chief executive Richard Harris has joined the voices criticising the proposal. He says the move would have severe consequences for the land-based gambling sector.
“We have a healthy business, but if it went to 40 per cent about a third of our estate would have to close,” he said. “Jobs would be at risk and it would have a big impact on local areas by hitting workers, but losing bingo halls would have a social impact, too. There are other operators who wouldn’t just be looking at shutting venues but wouldn’t have a future at all.”
Other operators have also issued warnings over the move. The industry lobby group the Betting and Gaming Council has launched a campaign under the slogan Back Our Betting Shops in a bid to promote the sector’s contributions to local communities.
Fred Done, the founder of BetFred, has claimed that the operator would be forced to close 495 betting shops, resulting in the loss of 2,575 jobs and a reduction of £67m in tax revenues, within a year of a major MGD hike, although. Paddy Power co-founder Stewart Kenny accused him of “familiar scaremongering”.
The industry has already faced major tax hikes. British Remote Gaming Duty, which applies to online casino games and slots, rose from 21 per cent to 40 per cent in April. Also announced in last year’s Autumn Budget, duty on online betting will rise to 25 per cent from April 2027. However, Rank also benefited from one change in last year’s budget, which abolished Bingo Duty, previously charged at 10 per cent.
Nevertheless, Harris said Rank was feeling the impact of a range of cost pressures, including increased National Insurance contributions. The group has closed nine bingo halls over the past year as it grappled with rising labour expenses and weaker consumer spending.
Analysing Gambling Commission data, Deutsche Bank has suggested that out of the major British gambling operators, Rank Group would be hardest hit by a rise in MGD as it has the largest retail presence. The bank estimated an MGD burden of about £35m a year: around 44 per cent of forecast 2028 EBIT and 17 per cent of near-term EBITDA.
Deutsche Bank said that across the sector, gross gambling yield from retail machines stands at around £2.7bn, with Category B machines making up the largest portion of that figure.
FAQs
How would the proposed Machine Games Duty affect Rank Group?
Rank Group says that doubling from 20 per cent to 40 per cent would cause it to close around a third of its casinos and bingo halls in Britain, putting approximately 2,000 jobs at risk.
What is Machine Games Duty?
MGD is a tax charged on profits generated by land-based gaming machines in Britain, such as fruit machines and roulette terminals. On Category B machines, operators currently pay the duty at a tiered rate of just 5 per cent on stakes up to 20p, 20 per cent on stakes up to £5, and 25 per cent on stakes above £5. Category C machines, typically found in pubs, pay MGD at 20 per cent and lower-stake devices at 5 per cent.
What Machine Games Duty rise is proposed?
It’s been reported that the government is considering a scenario in which MGD on Category B slot machines would double, with the lower rate rising from 5 to 10 per cent, the standard rate from 20 to 40 per cent and the higher rate from 25 to 50 per cent. The rate for Category C machines would not change.
What are Category B slot machines?
Category B devices can pay out up to £500. They are the most common type of electronic gaming machine in UK betting shops, arcades and bingo halls and offer higher winnings than Category C machines, which are typically found in pubs.
What challenges is Rank Group facing?
Alongside the potential tax increase, Rank Group says it is dealing with higher costs, including increased National Insurance contributions and weaker consumer spending.
