Entain Expect £25m Hit From MGD Rate Increase; CEO Criticises Budget

Entain is expecting an immediate hit to its finances following the Autumn Budget. Chancellor John Healey announced yesterday that the Machine Games Duty (MGD) rate would be lifted from 20% to 25% of net takings on Category B machines in casinos and betting shops, in line with a report published by The Times.

Despite suggestions that an incremental raise would not be as detrimental to betting operators, Entain, the Ladbrokes and Coral owner, noted in a company statement that the new MGD level would cost its UK and Ireland division £25 million in additional costs per year straight off the bat. This would be an ongoing expenditure as opposed to a one-off cost.

Still, corporate management has sought to reassure Entain stakeholders that the group will be able to fully mitigate the impact of the latest tax hike within the next 24 months. They maintain that their FY2026 guidance and forecasts of generating £500 annual adjusted cash flow for 2028 remain unchanged.

Keeping their heads above water

In previous lobbying attempts, Entain warned that any tax regimes introduced would need to be “proportionate” as they are “critical to protecting customers”. Now, they will need to plough on with existing measures to keep their heads above water.

This will include estate rationalisation, group-wide cost-cutting initiatives, and trying to provide value to shareholders. Many operators have been forced to stomach the £1.7 billion tax raid from last year’s Budget, where remote gaming duty (RGD) on online casino bets paid surged from 21% to 40% of gross gambling yield (GGY), which came into effect in April.

Meanwhile, from April 2027, the general betting duty paid on online sports will climb from 15% to 25% of GGY, but horseracing will be exempt. Nevertheless, Entain, according to its latest company statement, suggests that such initiatives mentioned above makes it well “positioned to be a long-term industry winner”.

Entain express frustration

While the MGD rate increase might not have been as bad as first envisaged, Entain CEO Stella David couldn’t conceal her frustration. David had previously warned of the untold consequences of an MGD rate rise, and aside from writing directly to the Prime Minister, Entain unveiled a campaign entitled ‘What’s at Stake’ in the run-up to the Budget to draw attention to the embattled retail industry.

Reacting to the Budget, David said:

“This is another disappointing decision by the Government. The previous gambling tax increases announced have already had detrimental consequences across the industry, with the effects felt by employees, communities as well as customers. These additional taxes will further compound that damage and push more people into the growing illegal market.

“We will continue to work hard to limit the impact of these changes on our businesses, our people, and the communities in which we operate. Our priority is to protect jobs wherever possible whilst supporting retail presence on our UK high streets.”

The Betting and Gaming Council (BGC), meanwhile, lambasted the Budget as a “deeply damaging decision”. Previously, the BGC suggested a 5% uplift, according to modelling by accountancy firm EY, could see as many as 9,000 people lose their jobs, and 1,000 land-based venues shuttered.

Entain shares rally

Despite the pervading doom, Entain’s share price flew from 456.4p to 484.1p between 12:50pm and 1pm yesterday in the immediate aftermath of the Budget announcement.

By the end of play yesterday, Entain’s share price closed at 469.20p, a 3.65% uptick on Tuesday’s price, suggesting investors are bullish about its future.