Rank Group CEO Richard Harris has warned any potential increases in machine games duty (MGD) would have a detrimental effect on the UK’s gambling market.
Speaking during Rank Group’s latest investor update on 16 September, Harris claimed any increases in MGD would be “nonsensical from an economic perspective”.
Media reports published earlier this month suggested the Treasury was considering making increases to MGD as part of the upcoming Autumn Budget in October.
MGD in the UK currently sits at 20% for Category B machines and for most land-based gaming machines. A lower rate of 5% applies to gaming machines that cost £0.20 or less to play, while there’s a higher rate of 25% for those that cost £5 or more.
Influential think tank the Social Market Foundation has proposed raising MGD on Category B machines to 40%, suggesting this could boost the Treasury’s tax coffers by as much as £458m, but Harris warned a hike of this nature would be counterproductive.
The CEO said: “The theoretical impact of higher machine games duty, if you take what has been proposed by some of the think tanks that have been vocal on this, could be as high as £35m. That is a pre-tax number, and that would be before any mitigating actions that the business would take.
“That is nonsensical from an economic perspective because it would make a number of our venues unviable. We are economically rational people. It would inevitably lead to venue closures, both in our business and across the casino and bingo sectors. If we close venues, that also leads to job losses. It also leads to lost investment.
“In my view, it would lead to reduced tax receipts from the gambling sector within the next 12 months.
“The economic case on this is not particularly strong. Actually, it does not make any economic sense whatsoever.”
He went on to emphasise the importance of the operator increasing its revenue from international sources.
Harris, who took over the CEO role on a permanent basis in July, used the Iberian market as an example of where future growth could be generated for Rank.
He added: “International digital accounts for around one eighth of our total digital revenues, and there’s definite opportunity to increase that international digital percentage over time.
“The Yo! brand is particularly strong in Spain, where we’ve got 50% of the online bingo market. We’ve grown the brand into also being a casino and sports brand. What we’ve done so far is take that Yo! brand, particularly YoBingo, into Portugal.
“We are the first and only online bingo operator in Portugal, and we’ve invested £1.3m into growing that business in the last financial year, and we’ll continue to invest in the current financial year.
“It’ll be loss-making in Portugal for the next 12 months with a view to getting profitability and cash generation started from FY 2028. Is that alone going to materially change the dial from 8% of revenues to materially more than that? Probably not. But Portugal, more than that, is a test for us about how we take our existing brands and trial them in new markets.
“If you look at Rank Group, compared to some of our industry peers, they’ve got a greater share of international revenues. We’re very conscious of that and we’ll be looking to grow that over time.”
Likewise, group CFO Cliff Baty highlighted the importance of international revenues since remote gaming duty (RGD) shot up from 21% to 40% in April, saying: “Post RGD, the differential in actual tax rates makes those international revenues and growing them more important.
“Being licensed in Ceuta or Portugal, with significantly lower tax than the 40% we’re paying in the UK, clearly it is an area we would look to grow.”
The post A machine game duty hike would be “nonsensical”, warns Rank Group CEO first appeared on EGR Intel.
Richard Harris insists rumoured tax increases “do not make any economic sense whatsoever” and would lead to job losses and lower tax revenues
The post A machine game duty hike would be “nonsensical”, warns Rank Group CEO first appeared on EGR Intel.