Entain CEO Stella David has cautioned that a potential increase in the UK's Machine Games Duty (MGD) could backfire on the Treasury, leading to widespread betting shop closures and job losses. Speaking during Entain's third quarter trading update, David outlined the company's position on the UK government's speculated move to raise MGD to 40% in the upcoming budget.
Potential Impact of MGD Increase
David referenced independent analysis indicating that a significant hike in MGD could result in around 1,500 betting shop closures and approximately 16,000 job losses across the UK. She emphasized that such a measure could reduce the Treasury's net tax intake, as a shrinking high street presence would undermine the sector's contribution to public finances.
Further analysis from Regulus Partners suggested that if 4,000 shops were to close, as many as 28,000 jobs could be lost, with MGD returns possibly declining by nearly a third. David noted that Entain is focused on communicating these risks to policymakers, while preparing contingency plans in case of a tax increase.
Entain's Broader Market Outlook
Despite the uncertainty in the UK, David expressed optimism about Entain's global prospects, highlighting the company's strong brands and diversified footprint. She said Entain remains confident in its ability to meet its long-term financial guidance, even as it navigates regulatory and market headwinds.
In Brazil, where recent regulatory changes have created volatility, David noted that Entain's Sportingbet brand is well positioned should the market reopen, particularly if online sports betting is permitted. She also expressed the belief that Brazil will eventually reintroduce some form of regulated iGaming.
Developments in New Zealand
Entain's Chief Financial Officer, Michael Snape, reported positive developments in New Zealand, where the company has been approved to apply for three online casino licences following a recent auction. Snape indicated that the competitive landscape was surprising but promising, and does not expect the market to experience the same challenges faced in Brazil.
Why This Matters for the Industry
The potential increase in MGD is significant for operators, affiliates, and suppliers active in the UK market. Higher taxes could force many betting shops to close, reducing retail opportunities and impacting employment across the sector. For affiliates, a shrinking retail sector could mean fewer partnership opportunities. Suppliers could also see reduced demand for their products and services. For regulators and policymakers, the analysis highlights the risk that increased taxes may not deliver the intended fiscal benefits and could instead undermine the industry's overall contribution to the economy.
Key takeaways
- Entain warns a UK MGD hike could lead to shop closures and job losses.
- Analysis suggests increased taxes may reduce Treasury revenue from betting.
- Entain remains optimistic about Brazil and New Zealand market prospects.
- Industry stakeholders face uncertainty amid potential regulatory changes.