Machine games duty rise threatens high street bookies and racing income

Britain's horse racing industry is once again braced for Budget-day anxiety, a year after Chancellor Rachel Reeves exempted the sport from a rise in betting duty, according to the Guardian.

This time the concern centres on machine games duty (MGD), the levy on profits from gaming machines in betting shops. John Healey is expected to raise the rate in Wednesday's Budget, a move the industry warns could trigger widespread closures on the high street, the Guardian reported.

The prospect of a steep increase was first raised by the Social Market Foundation in a June report, which recommended doubling MGD from 20% to 40% to reflect what it described as the higher rates of harm linked to machine gambling compared with betting on racing and sport.

The gambling industry responded sharply. Citing analysis from consultancy Regulus Partners, it warned that such a rise could force the closure of up to 4,000 of the UK's 5,500 betting shops within three years, costing racing an estimated £92m in annual income — around a third of its total betting-derived revenue.

The British Horseracing Authority voiced similar alarm. Its director of communications and corporate affairs, Greg Swift, said in a statement this month that the change "would have devastating consequences for British racing", warning it would affect "prize money, Levy funding and our ability to continue investing in our world-leading equine welfare and veterinary research projects".

More recent reports ahead of the Budget suggest Healey may opt for a smaller increase, from 20% to 25%. Even that scaled-back rise, the industry argues, could still produce hundreds of shop closures and tens of millions of pounds in lost revenue for racing.

Shop numbers have already fallen sharply, from around 9,000 a decade ago to roughly 5,500 now, a decline the Guardian attributes largely to the shift of younger bettors toward online gambling rather than tax policy alone.

Racing's exposure to shop closures stems from how its income is structured. Media rights and data payments are agreed on a per-shop basis, with Regulus Partners estimating that racing receives around £27,000 in media rights and Levy payments from an average shop's annual revenue of £440,000, the Guardian reported.

The piece argues racing bears some responsibility for its current vulnerability. It recalls how, following his appointment as prime minister, Andy Burnham grouped betting shops with vape shops and adult gaming arcades as unwelcome high street fixtures — a characterisation the BHA objected to at the time.

The Guardian's analysis suggests that an outlet unable to absorb a modest MGD increase functions less as a betting shop than as what it terms a mini-casino with betting as a secondary offer. It traces this back to the proliferation of shops opened specifically to host the maximum of four fixed-odds betting terminals (FOBTs) each, a strategy that at one point saw 18 shops line a single stretch of Hackney's high street in the mid-2010s.

According to the Guardian, racing largely stayed on the sidelines during the later campaign that cut maximum FOBT stakes from £100 to £2, continuing to collect media rights income while the controversy over machine-related harm played out elsewhere in the industry.