A potential increase in Machine Gaming Duty will hit UK operators unevenly, with Rank Group facing the heaviest impact, Deutsche Bank warned. Chancellor John Healey is considering raising the tax on gaming machines following a recommendation by the Social Market Foundation, Financial Times reported.
The bank analysed Gambling Commission data showing annual GGY from gaming machines at £2.7bn ($3.5bn), most of it from category B machines. Rank holds the largest retail estate and would face an additional £35m in annual costs — 44% of its forecast 2028 EBIT and around 17% of EBITDA even after partial mitigation. Before mitigation, doubling MGD to 40% would wipe out 24% of EBITDA. The company's plan to reach £100m EBIT through machine rollouts would be at risk. Rank said many sites could become 'unviable' and job cuts are possible. Deutsche Bank maintained a hold rating, downgraded from buy in January.
Entain would lose around £100m annually before offsetting measures, a figure the operator confirmed in a letter to mayor Andy Burnham. Entain warned a sharp MGD rise could push up to £1bn in wagers to the black market. The cost would represent 10% of forecast FY27 EBITDA and 20% of target FY28 free cash flow. Entain shares are trading near multi-year lows. The company has already cut 400 customer support roles out of 2,000 in Britain. Deutsche Bank assigned a buy rating.
Flutter will be the least affected, with its valuation tied to US-based FanDuel. The additional tax would add under $20m to UK retail costs, less than 1% of group EBITDA. The bank noted that offsetting MGD increases is far harder for retail than online: land-based operations carry high fixed costs in rent and staff. The baseline mitigation is 30% of the increase through closure of loss-making sites. Betfred shut 132 shops this year following last year's RGD rise; Evoke closed 200 William Hill sites in April.
