Rank CEO Warns of Impact from Proposed Machine Games Duty Increase

The CEO of Rank Group, Richard Harris, has expressed concerns over proposed increases to Machine Games Duty (MGD) from 20% to 40% in the UK. Speaking with EGR, Harris warned that such a hike could lead to venue closures, significant job losses, and lower tax revenues. He attributed the proposal to efforts by anti-gambling campaigners, urging careful consideration of its broader impacts on the industry.

The Regulatory Environment

Rank Group, which focuses on the UK market, is navigating increased regulatory pressures. Harris noted that operators have adapted to these changes over time, emphasizing the importance of strategic adjustments in response to regulatory shifts like the recent remote gaming duty increase to 40% effective from 1 April.

"We’ve implemented decisive actions to mitigate these changes," Harris shared. Despite regulatory challenges, Rank maintains a strong market position, benefiting from growth and a 17% rise in stock value over six months.

Impact of Machine Games Duty Increase

Harris argued that an increase of MGD to 40% would almost certainly lead to negative consequences:

• Venue Closures: Many venues could become economically unviable.
• Job Losses: Significant employment impacts are expected across casinos, bingo halls, and other gaming locations.
• Reduced Tax Receipts: A higher MGD may paradoxically lower tax revenues, echoing trends in other jurisdictions like the Netherlands.

"Higher tax rates in venue-based businesses often result in lower receipts," Harris explained, stressing the high supervision standards and customer loyalty at Rank’s locations.

Digital Growth and Innovation

On the digital front, Rank Group reported an 8% increase in net gaming revenue (NGR) and a 10% rise in average revenue per user (ARPU). Harris attributed this success to investments in customer propositions and performance marketing, improving platform stability and user experience.

"These investments have enabled us to increase our share of the customer wallet," he noted. Although brick-and-mortar venues face challenges, the digital side presents opportunities for continued growth.

Enhancing Customer Experience

Rank Group is focused on creating a seamless omnichannel experience. Harris mentioned significant progress with the Mecca app and unified membership systems, aiming to streamline digital and physical interactions.

"Customers demand seamless interaction with our services, and we are committed to delivering on that," Harris stated, acknowledging that while there is room for improvement, the vision sets a clear direction.

Sports Betting Developments

Sports betting remains a minor component of Rank’s portfolio but has seen developments. The World Cup provided an opportunity to integrate sports betting terminals in 24 Grosvenor Casino venues, a move Harris found promising.

Though not transformative, Harris noted, "Our venues’ recent inclusion of sports betting during the World Cup was a valuable experiment, indicating growth potential over time."

Conclusion

Rank Group faces significant challenges ahead with proposed regulatory changes. However, through adaptive strategies and technological investments, it aims to sustain growth and enrich customer experiences. The interplay of digital innovation and regulatory management remains central to its continued success.