Increase in MGD tax could close venues and reduce jobs

The CEO of Rank Group, Richard Harris, has expressed concern over proposals to increase the tax on gaming machines, suggesting this could lead to venue closures and significant job losses. During a results presentation, Harris criticized the initiatives of some anti-gambling groups and stated that the industry already faces regulatory challenges in the United Kingdom, where Rank primarily operates.

Regulatory challenges in the United Kingdom

Rank Group faces an increase in the remote gambling tax to 40%, effective from April 1, influenced by proposals from the Social Market Foundation. This change comes alongside a challenging macroeconomic and fiscal environment, forcing FTSE 250 companies to quickly adapt to maintain their growth, which was 17% in the last six months.

Harris mentioned that operators must get used to working in a context where favorable conditions are unlikely to be found. "I mention the mitigating actions we took when the tax increase was announced," said Harris.

Potential impact of the MGD increase

The increase in the gaming machine tax from 20% to 40% could have a severe impact on the industry, including venue closures, job losses, and a general reduction in tax revenue. Harris explained, "Theoretically, higher MGD payments would be obtained, but with venue closures, total revenues could decrease."

The experience of countries such as the Netherlands demonstrates that an increase in tax rates may not translate into higher tax revenues, especially in physical businesses.

Digital growth and omnichannel strategy

In the digital realm, Rank's Net Gaming Revenue (NGR) rose by 8% and the average revenue per user (ARPU) increased by 10%. Harris highlighted the importance of continuing to invest in the customer proposition and improving the technical performance of their platform.

Moreover, Rank is developing a strategy to provide an integrated experience both online and in physical venues. A significant step is the upcoming implementation of a unified membership system for Mecca.

Outlook for sports betting

Sports betting represents a small part of Rank's business but integrates convenience for Grosvenor Casino customers who wish to bet on sports. During the World Cup, new concepts were trialed in several venues, which is expected to contribute to future growth.

While the tax increase generates concern, Rank Group is committed to adapting to the changing regulatory environment while continuing to drive growth and provide high-quality experiences to its customers.