Rank Group CEO Says a 40% MGD Would “Make No Economic Sense”

Rank Group CEO Richard Harris told investors an increase in machine games duty (MGD) would “make no economic sense” and would be “nonsensical”, warning that raising the rate to 40% will cause job losses at the Grosvenor Casinos and Mecca Bingo owner.

In June, cross-party think tank the Social Markets Foundation called for MGD on Category B machines in the UK to be raised to 40% of net takings, which would be double the current rate of 20% of revenue generated on gaming machines in both casinos and bingo halls.

The SMF wants a tax rate to encompass all Category B machines, arguing the government needs to raise revenue, and that more harmful types of gambling should lead to higher rates of tax. The SMF’s basis for this is that, according to the Gambling Survey for Great Britain covering 2023, one in four (27%) casino game users on machines gambles at risky or harmful levels - the highest of any major category.

Unviable and nonsensical

An MGD increase would impact Rank directly, as it operates machines at its land-based venues. Speaking on a call with investors, Harris mentioned how this could cause a £35 million hit annually for the operator, and that it will eventually make some of its venues “unviable”.

Harris said:

“Any increase in MGD puts pressure on the viability of our venues. You can see on the slide the impact of wage inflation and higher taxation on the number of Mecca venues and Mecca colleagues over time.

“Unfortunately, any increase in MGD would lead to fewer venues across the sectors, lower employment, and reduced tax receipts within 12 months. From my perspective, it makes no economic sense for the government to consider increasing MGD. As we approach the Chancellor's budget, I'm determined to do all we can to amplify our arguments with the Treasury.

“It is nonsensical from an economic perspective, because it would make a number of our venues unviable, and we're economically rational people. It would inevitably therefore lead to job closures.”

Increase under consideration

Reports earlier this month suggested UK Chancellor John Healey is giving serious consideration to raising MGD in the Autumn Budget, which will be announced on Wednesday, 28 October. This would be the latest additional tax burden for operators, after increases to remote gaming duty (RGD) and general betting duty (GBD) were announced in last year’s Autumn Budget.

In that budget, which was pushed back to November, then Chancellor Rachel Reeves confirmed RGD, paid on online casino bets, would rise from 21% of gross gambling yield (GGY) to 40%. This change was implemented in April this year. In addition, GBD, paid on online sports bets, will go up from 15% of GGY to 25% in April 2027; bets on horseracing will be exempt from this increase.

Rank has previously stated how in attempting to mitigate against the increase, it has made cuts in above-the-line marketing spend, supplier costs and headcount reductions. Performance marketing spend and customer incentives have been protected.

Entain CEO backs up Harris

Harris’ comments come after Stella David, CEO of Ladbrokes and Coral owner Entain, warned a doubling of the MGD rate to 40% could result in widespread betting shop closures and job losses. Like Harris, David said this could reduce tax income for the government in the long-term, and that this could increase operational expenses for retail by £100 million annually.