Key Takeaways:
A Social Market Foundation proposal to double machine games duty to 40% threatens to extract as much as £458 million annually from UK gambling operators, sending shares in Entain and Rank Group lower Tuesday.
A proposal to double the tax on higher-stakes gambling machines to 40% could cost UK operators as much as £458 million a year, sending shares in Ladbrokes owner Entain PLC and Grosvenor casino operator Rank Group PLC lower Tuesday.
"The current 20% rate on Category B machines already generates around £600 million annually for the Treasury, and doubling it would risk pushing customers toward unlicensed operators," a spokesperson for the Betting and Gaming Council said.
The Social Market Foundation, a thinktank, estimated the higher rate would raise between £275 million and £458 million on top of existing receipts. The proposal targets Category B machines, which allow £2 spins every 2.5 seconds and are found in casinos, adult gaming centres — so-called "slot sheds" — and betting shops. Entain fell 2% to 579.8 pence, while Rank slipped 2.1% to 101 pence. Flutter Entertainment PLC was little changed at 7,782 pence, and Evoke PLC bucked the trend with a 0.3% gain to 47.2 pence.
The proposal, reported by the Guardian, is linked to Greater Manchester Mayor Andy Burnham, a potential future Labour leadership contender who has criticized adult gaming centres for "targeting some of the most vulnerable in our communities." Industry group Bacta called the report "fantasy economics and grossly irresponsible," warning that a 40% rate would cost jobs. Current Chancellor Rachel Reeves declined to increase the duty in November's Budget partly because of concerns over the horse racing industry's reliance on betting shop profits, the Guardian reported, suggesting the policy faces political hurdles even if Burnham's influence grows.
The Social Market Foundation's proposal arrives as the UK gambling sector already faces heightened regulatory scrutiny. The Gambling Act review, initiated under former Prime Minister Boris Johnson and enacted in stages since 2023, introduced tighter affordability checks and stake limits for online slots. A further tax increase on physical machines would compound pressure on operators with significant high-street exposure.
Entain, which operates roughly 4,500 betting shops under the Ladbrokes and Coral brands, derives a material portion of its UK revenue from retail gaming machines. Rank Group, which runs 51 Grosvenor casinos and 87 Mecca bingo halls, is similarly exposed to Category B machine revenue. The last time the government raised machine games duty — a 5 percentage point increase to 20% in 2015 — industry revenue from gaming machines contracted by roughly 8% over the following 12 months, according to UK Gambling Commission data.
For Burnham, the proposal aligns with his broader campaign for stronger local licensing powers over gambling venues. He has previously called for councils to have the authority to limit the concentration of adult gaming centres on high streets, particularly in deprived areas where they have proliferated. If Burnham succeeds current Labour leader Keir Starmer, the policy could gain formal party backing ahead of the next general election, currently scheduled for 2029.
This article is for informational purposes only and does not constitute investment advice.
