UK betting trade split over how to fight MGD doubling threat

Operators across the UK's high-street gambling sector are weighing whether to argue publicly that adult gaming centres (AGCs) should absorb more of the pain from a potential doubling of machine games duty (MGD), rather than betting shops — a tactic that former British Horseracing Authority chief executive Nick Rust believes could damage the wider industry's case.

"I don't think the public really differentiates between locations on the high street where you can play machines," Rust told iGaming Business. "Whenever you start attacking a subsector within your own industry, you have to think about what that looks like. Whataboutery isn't going to help anyone."

The government has floated raising MGD from 20% to 40%, and consultancy Regulus Partners has modelled the consequences for betting shops. Its figures suggest the number of shops could fall to around 1,500, with roughly 4,000 closing, 28,000 jobs lost and £92 million stripped from horseracing's funding.

Regulus puts average annual revenue per shop at about £440,000, split close to evenly between betting and gaming machines. Once staffing, tax, rent, racing payments and other costs are deducted, the typical shop is left with a net annual contribution of around £44,000 — a margin Regulus says a doubled duty would erase, since the extra tax burden per shop would run to roughly £45,000.

Regulus expects the fallout to play out gradually, through lease expiries and refurbishment decisions rather than instant closures across the board. The consultancy also projects that total MGD receipts taken from betting shops would actually shrink by around a third, down to about £155 million, which would cut against the Treasury's apparent rationale for the increase.

Rust accepts the scale of that warning. "The 1,500 number rings true to me," he said. "This isn't crying wolf now." He is more sceptical of past industry messaging, arguing that bookmakers held on to more machine revenue after the fixed-odds betting terminal reforms than their public statements implied: "The industry was perhaps crying wolf at that time, which is why I would say the impact was slightly over-egged." He instead points to accumulated pressure from "general costs, media rights costs and National Insurance rises."

Bingo operators have made similar warnings through their own channels. Bingo Association chief executive Nicole Barrett told BBC Breakfast News that "machines are an important secondary income for bingo clubs," adding that a duty rise is "just another tax increase that could undermine that." Buzz Bingo chief executive Dominic Mansour told BBC Five Live that even a five-percentage-point rise would make a third of his clubs unviable, calling the prospect "really, really tough for us."

Writing in the Racing Post, consultant Vaughan Lewis — formerly of Evoke and now of Teise Advisory — framed the issue around racing's reliance on betting-shop income, arguing that machine takings help fund levy and media rights payments that AGCs do not make, and that arcades could be better positioned to pick up displaced machine players. He warned a higher rate risks strengthening AGCs while eroding racing's betting-shop distribution network.

An industry consultant who spoke to iGaming Business anonymously rejected that framing outright, arguing that category B machines carry identical player-safety characteristics regardless of venue: "the setting is not that relevant to player safety," they said, calling any distinction "a matter of taste." They also disputed the idea that AGCs have spare capacity to absorb the tax: "The idea that AGCs are going to be OK with 40% MGD is wrong – they have a bigger problem, not less." Regulus's modelling does not include an equivalent AGC forecast.

The same consultant warned that singling out AGCs could hand the Treasury an argument for keeping the increase: "If betting uses the argument that arcades can withstand this, then that is saying raise the tax. If a tax rise isn't a problem for AGCs, then your argument has been lost." They described the tactic as "special interest pleading and not a real argument."

Rust drew a parallel with the FOBT debate, recalling that amusement trade body BACTA had attacked bookmakers at the time: "that didn't help them," he said, questioning whether reversing the attack now would change public opinion: "Will attacking another part of the industry have an impact on the public? No."

His concern extends beyond racing's revenue. Visiting betting shops near his home, Rust said: "There used to be two shops, now it is down to one and I can see this becoming a town with no betting shops."