Genting Closes Ranks Against Tax Rise

Genting says 13 of its 32 casinos could become unviable if Machine Games Duty doubles. Rank has warned that more venues could close, despite Grosvenor reporting 14% growth in machine gaming revenue.

Six major gambling businesses have backed a letter to the Chancellor opposing higher taxes. Conservative MP Louie French has called for the proposal to be dropped in a video filmed at Genting's Resorts World Birmingham.

Genting puts jobs and venues at risk

Genting chief executive Paul Willcock says raising the standard duty rate from 20% to 40% would add around £16 million to the company's annual tax bill. Its assessment identifies 13 casinos that could become commercially unviable, putting more than 850 venue jobs and around 50 support roles at risk. 1

The 13 venues have not been named, and Genting has not announced their closure.

Grosvenor grows as Rank closes three casinos

Grosvenor's like-for-like net gaming revenue rose 6% to £108.1 million in the first quarter, according to Rank's 15 October trading update. Machine gaming revenue increased 14%.

Rank also confirmed that its casinos in Swansea, Reading Central and Sunderland had closed because it no longer considered them economically viable in the medium term. The closures predate any increase in Machine Games Duty. 2

Like-for-like results exclude closed venues. The 6% growth applies to casinos included in the comparison, not those that have since closed.

Chief executive Richard Harris has warned that higher machine duty could undermine investment and threaten further venues and jobs.

The case for raising duty

Machine Games Duty is charged on taxable net machine takings. The current standard rate is 20%, with separate lower and higher rates for certain games and machines. The proposal under discussion would raise the rate on Category B machines to 40%. 3

The Gambling Commission classifies gaming machines by their permitted stakes, prizes and the premises in which they can operate. Category B covers several different types of machine, not just casino slots. The comparison below shows the differences.

The Social Market Foundation argues that higher duty would raise public revenue while reflecting the harm associated with machine gambling. It estimates £2.33 billion in annual economic losses linked to machine gaming, including £669 million in fiscal costs. Its research estimates an additional £458 million a year before allowing for changes in gambling behaviour, falling to around £275 million under its behavioural assumptions. 4

Operators argue that higher duty could push some venues into losses, costing jobs and reducing the tax paid by casinos that close.

Six operators write to the Chancellor

Executives from Entain, Flutter, bet365, Bally's, Evoke and Betfred have backed a letter to Chancellor John Healey opposing higher gambling taxes. 5 6

The letter draws on EY modelling commissioned by the Betting and Gaming Council. According to reporting on the letter, the scenarios include 28 to 34 casino closures, 690 to 1,470 betting-shop closures and 11,600 to 15,900 job losses across affected businesses.

The 28 to 34 figure is an industry-wide scenario, not a further 28 to 34 closures on top of Genting's forecast.

Louie French calls for duty increase to be scrapped

Conservative MP Louie French has called for the increase to be scrapped. In a video filmed at Genting's Resorts World Birmingham, he points to the development's hotel, restaurants, cinema and bowling alley, describing around £150 million of investment and more than 1,200 jobs created on site.

French argues that the Treasury could lose more revenue than it gains from a higher duty rate. He cites Genting's Coventry casino closure as an example of the jobs that disappear when a venue shuts.

“The government must stop this proposed hike to machine gaming duty,” he says. 7

The Betting and Gaming Council says French met its members at Resorts World during the Conservative Party Conference on 6 October. 8

The decision ahead

The standard Machine Games Duty rate remains 20%. The proposed increase has not been enacted.

The Social Market Foundation forecasts hundreds of millions in additional receipts. Operators say the cost could be closures, lost jobs and less tax collected from casinos that no longer trade. The Chancellor must decide whether to pursue the higher rate in the Budget.