The UK government is considering doubling machine games duty (MGD) from 20% to 40%. Retail bookmakers and the owners of adult gaming centres (AGCs) are arguing in public over who would be hit harder. Nick Rust, former chief executive of the British Horseracing Authority, says that argument is a mistake. The customer does not check who holds the licence on the machine.
Regulus Partners puts the damage at around 1,500 betting shops left in the country after the doubling. About 4,000 sites would close and 28,000 jobs would go. Racing would lose £92m. An average shop turns over about £440,000 a year, roughly half from betting and half from machines. Net cash contribution after costs is around £44,000. Doubling MGD would add about £45,000 in costs to that average shop and take the whole margin. MGD receipts from bookmakers would fall 32% to £155m. Rust calls the forecast plausible. It is not panic. Costs, media rights payments and National Insurance contributions have already been squeezing the estate.
Nicole Barrett, chief executive of The Bingo Association, told the BBC that thousands of jobs in bingo are at risk; machines are a key source of extra revenue for clubs. Dominic Mansour, chief executive of Buzz Bingo, said even a 5% rise in MGD would make a third of the chain's clubs unprofitable. Consultant Vaughan Lewis, writing in the Racing Post, looks at the tax through racing's dependence on bookmakers. Machine income keeps open the shops that pay the levy and media rights. AGCs carry neither. So some customers of closed shops could move into arcades.
An industry consultant, speaking anonymously, disagrees. Category B machines are the same wherever they stand. The character of the venue does little for player safety. The idea that AGCs would ride out a 40% rate is wrong. They have the bigger problem. The bookmakers' argument rebounds on them: if arcades hold up, the Treasury hears only that the tax can go higher. Rust points to the fixed-odds betting terminals fight, when BACTA attacked the bookmakers. It helped nobody. And the demand does not vanish with the licensed shop. Some of the play moves to pubs and unlicensed clubs.
