MGD hike threat exposes divisions across gambling’s high street

Britain’s gambling sector faces pressure to unite against a threatened machine games duty increase. There have been warnings that divisions between bookmakers and adult gaming centres could undermine opposition.

Former British Horseracing Authority chief executive Nick Rust has questioned the value of arguing that some gambling venues deserve greater protection than others.

“I don’t think the public really differentiates between locations on the high street where you can play machines.”  - Nick Rust

His comments show a growing disagreement over how the industry should respond to a possible doubling of the standard MGD rate from 20% to 40%.

Betting-shop closure warnings

MGD applies to machine takings after winnings are deducted. HMRC currently lists the standard rate at 20%. A rise to 40% has not been enacted.

Regulus Partners estimates that doubling the rate could lead to around 4,000 betting-shop closures, leaving approximately 1,500 operating. Its forecasts include 28,000 job losses across the wider economy.

The consultancy’s model puts an average shop’s annual net cash contribution at roughly £44,000. The additional duty would add approximately £45,000 to costs, eliminating that contribution.

Regulus also forecasts that betting-shop MGD receipts could decline by around 32% to £155 million as closures reduce the taxable market. These figures are based on a modelled scenario rather than confirmed outcomes.

The BHA has said that there could be a potential £92 million annual reduction in racing income under the modelling. It warned of consequences for levy funding, prize money and investment.

Disagreement over arcade exposure

The dispute centres partly on the role machine income plays in supporting different businesses.

Consultant Vaughan Lewis argues that machines help sustain betting shops which contribute to racing through levy and media rights payments. Adult gaming centres do not make equivalent racing payments and could attract customers displaced by shop closures.

However, another industry consultant has challenged the assumption that arcades could comfortably absorb higher duty.

The concern is that portraying one part of the sector as able to afford an increase could strengthen the government’s case for imposing it.

Regulus’ betting-shop model does not provide an equivalent forecast for adult gaming centres, leaving their comparative exposure unresolved.

Bingo clubs face similar pressures

Bingo operators have also warned about their reliance on machine income. Buzz Bingo chief executive Dominic Mansour has said even a smaller MGD increase could make a third of its clubs unviable.

Rust pointed to employment costs and media rights charges as additional pressures on betting shops. He also highlighted their role as local meeting places.

For businesses opposing higher duty, the challenge is to demonstrate the likely consequences for employment, venue viability and tax receipts without weakening their case through disputes over which premises should survive.