Jennings Bet MD Hints At Mass UK Shop Closures Over MGD Rate Rise

Jennings Bet Managing Director Greg Knight has issued a stark warning on the UK government’s Machine Games Duty (MGD) proposal, insisting a steep hike could lead to around half of the company’s retail empire being shuttered.

Speculation has mounted that Chancellor John Healey could lift the MGD rate on Category B machines from 20% to 40% of net takings in the October budget. And according to Knight’s calculations, this would see 104 Jennings Bet shops closed.

Bearing the brunt

A fiercely independent, family-owned business, Jennings Bet’s beginnings were rather humble, starting out with 10 shops across Essex. Over the past few years, it has expanded rapidly, opening more than 100 sites, with 212 locations across London and the South East, and employing nearly 900 people.

The spectre of an MGD rise comes as Prime Minister Andy Burnham has pledged to revitalise Britain’s "hollowed-out high streets”. But Knight fears that any MGD hike could also lead to around 400 redundancies at Jennings Bet.

Asked for his thoughts, Knight said:

“Let’s say I have to close 100 shops — and that’s no exaggeration — I think that’ll be the first move. I can close shops, but I can’t just walk away. I’m committed to leases, business rates, and I’d have over 400 redundancy payments to make.

“The profitable branches can’t support that level of empty costs, so you’re in a doom loop. So it’s an initial 100 followed by the liquidation of the company.”

Tax reprieve for Jennings Bet short-lived

For Jennings Bet, which only has a retail presence, the measures announced in last year’s budget by then-Chancellor, Rachel Reeves, gave them a short reprieve. In it, remote gaming duty (RGD) paid on online casino bets shot up from 21% to 40% of gross gambling yield, hurting omnichannel operators.

More pertinently, provisional data released by HM Revenue & Customs (HMRC) revealed that RGD was responsible for half of all UK betting and gaming duty receipts collected. The data seemed to defy arguments that an increased RGD would lead to a diminished tax yield, and with the new RGD rate in effect, tax take year-on-year rose by 108%.

Although the Social Market Foundation (SMF) projected doubling the rate on Category B machines could generate additional annual tax revenue for the government in the region of £275 million to £458 million, Knight thinks the effects are likely to manifest more quickly. Rather, Knight has admitted the business model is much different than it was 12 months ago.

Lobbying efforts intensifying

Betting companies have been forced to buffet the strong economic winds swirling through the industry. Over the summer, Betfred confirmed it would close 132 shops due to the tax rise, while Paddy Power carried out an extensive review of its UK and Ireland betting estate, fearing 100 land-based venues shut.

As far as the MGD rate is concerned, lobbying efforts have intensified with companies deploring the proposals. The Betting and Gaming Council (BGC) unveiled its own campaign last week entitled ‘Back Our Betting Shops’ to create awareness of how MGD proposals could decimate jobs and local communities, while Entain launched ‘What’s at Stake’ to get the government’s attention.

Impact to be felt

Analysis carried out by consultancy firm Regulus suggested as many as 4,000 betting shops could close within three years if no mitigating measures are adopted.

Jennings Bet will be desperate to avoid becoming another high street casualty, but keeping its heads above water could end up being a losing battle.