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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
speaker-0 (00:00.248)
The UK gambling industry is facing another major tax battle as the government
Threatens to double machine games duty taxes for this year. So betting shops, bingo holes, land-based operators all warning about closures and possible losses loss of jobs while the government also faces pressure to increase revenue. Welcome to iGaming Daily today, live from the SVC Summit show floor, where we will discuss this and more about the general situation of the land-based industry in the UK.
the industry's reaction was to this and what the government is likely to do in the next couple of weeks slash months. I'm Fernando Nott, Media Manager for SBC and your host for today's episode of iGaming Daily where I'm joined by Christian Lee. Chris how are you today?
speaker-1 (00:49.88)
Thanks. Good talk to do podcasting person as well. The other side of the world to us, so that was nice.
speaker-0 (00:55.478)
Yeah, that's right, that's right. It's nice to for a change to to not to be on the other side of the screen. but also with us Patrick Killing. Patrick, how are you today?
speaker-2 (01:04.866)
Yeah, I'm good, thanks. It's it's kinda good to be at my first big SBC event I suppose and like Christian said, it's always good to to do one of these in person, especially with yourself.
speaker-0 (01:14.2)
Yeah, absolutely, absolutely. Really glad to to be with you guys. And like always, we are also with Opsimoop, the creator of Positionless Marketing and number one player engagement solution for iGaming and sports baiting operators. so guys, let's crack on. Let's talk about the UK, the government reportedly doubling machine games duty. How serious is this threat this time around?
speaker-1 (01:38.922)
Pardon the pun, but I think it's pretty odds on at this point that it will happen. I think we saw last year with the remote gaming duty that gambling is seen as quite an easy target for the government if when he wants to raise taxes on a sector. And now that remote after remote gaming duty was a target, we've now got to the point where the next thing down the line is machine games duty. And there seems to be plenty of support for that within government and outside of government as well. the social market foundation think tank.
has been pretty on the front foot about raising machine games duty and it seems to be something that MPs have definitely taken a hold of.
speaker-0 (02:16.622)
Why do you guys think that the machine games duty has become such a major flash point for land based operators in
speaker-2 (02:23.374)
well it's a major part of the the the UK betting shop. even your generic betting shop as opposed to to an AGC or a bingo hall, like you know, it's kind of split into to over the counter bets, fixed odds bet fixed odds betting terminals and and your machine games. So there's it's it's such a pivotal part of of the betting shop but it's it's potentially or at least in my opinion it's the it's the least like sociable thing to do. Like you don't
You you know, you can kind of use the excuse of interacting with people within the bookies or people who are working at the bookies when you talk about other other points of of physical betting. I don't think machine games duty is one of those, so I think I think it you know there was a little bit of a pullback last year when the budget was announced on general betting duty, even though there was a was an increase from 15 to 25 percent. There was you could kind of see why why people were a little bit more sympathetic towards.
towards that that tax. But with machine games duty it's hard to for the industry to to to lobby against it when when it is what it is and when the public view on the on the the the a a betting a a machine game is is as it is.
speaker-0 (03:42.286)
Right. And actually the BGC is launching the back our job our shops sorry campaign. why do you why do you think it's trying to what do you think it's trying to achieve with this campaign? And and well I kind of already can make up why it's so focused on the community side of things but also on jobs. Why do you guys think that
speaker-1 (04:06.926)
Yeah, I think that the general public sort of rightly or wrongly, a lot of them have quite a dim view of gambling in the sense that they believe that all these companies are making multi million pounds, billion pound plus a year. So they see taxes further taxing the industry as sort of like a justified thing to do. But I think the BGC is sort of tapping into the human side of it with jobs being lost and the community aspect aspect of what a betting shop and an AGC can provide. That's something that can actually resonate with the general public and may help to provide a little bit
more support in favour of the gambling industry. So if the BGC went down the line of these gambling companies are losing money, people would just turn around and go, why should we care about that? But if you say your neighbour might lose their job he works at a Bedford store or your neighbour might lose the job he works at like a Merker AGC, that will actually people can understand that because it's something that sort of goes across sector. Whereas lobbying on the directly on the side of business is isn't something that the general public tend to get behind too much.
speaker-0 (05:06.87)
Right, right. Yeah, I guess you could say that when you talk about online gambling, you may know someone that works in the industry, but at the end of the day is people are just looking to a screen and on their own at at home or looking at their phone. in in this case we're talking about people that go into these places and see these people, this these shop workers or even other people that that play physically. So so I guess I can see why.
why this is such a concern right now in the UK. but of course major companies Bedfred, NTAIN, RANK have all warned about potential closures, potential betting shops closing if this machine games duty gets doubled like it's reportedly going to happen. So how credible are these warnings by the operators? how credible is it that they will close and and why what would it mean for the high street?
speaker-2 (06:05.688)
the the the high street there's a there's a bit of a a warped perception on the UK high street at the moment where where people think there's there's kind of the proliferation of gambling of betting shops when that's actually not the case when you look at the statistics but an increase it in machine games duty would would kind of further the the burden on on retail on companies with a retail estate there would be more closures you think about rank group which has which runs like you you mecha big
and you grow up in a casinos, their CEO is warning that it could close up to a third of their shops, which is which is kind of you can see exactly why that that warning is being is is he is putting that across mainstream media. It's the same with with Fred Doan that kind of got a lot of coverage last week in I think it was the Financial Times. He said 1500 shops would be in danger and that the you know the the retail you know retail gambling would become extinct by
2030. And it is credible because you think about the portion of revenue that that that machine games contribute to to the gambling industry in the UK, it will it will be a you know quite a significant portion of that, and and further burdens will further tax burdens will will kind of increase that pressure. You know, we have seen kind of doomsday calls from
from the tax last year, from from the FOD T restriction to two pounds a few years ago and and the gambling industry's kind of navigated those headwinds. But the the the
constant pressure is always seems like there's there's another thing that they're having to deal with from government and I know we talk about it a lot but with with kind of the prevalence of of black market operators and also the the the the decline that you're seeing from gambling commission stats in in retail betting, you can see why these warnings are being kind of projected by the the CEOs of the the big companies in the UK.
speaker-0 (08:10.894)
And one thing that that pops up is the pressure the government is facing to to raise revenue. so how how much political leverage does the industry have considering this pressure that the government is facing? Like the government is it's not at a point where it can freely negotiate negotiate and and say, Okay, yeah, we'll let you like have a lower tax or whatever. so they are pressured. So what's what leverage does the industry have?
especially considering that it's it tends to be an easy target for governments to to like okay we need to raise money, we need to increase taxes to someone that's go to the gaming industry. So what's what political leverage does the industry have right now?
speaker-1 (08:54.712)
As you said, gambling is definitely seen as an easy target. Within Labour, I struggle to see where the support for the industry will come from within the actual party itself. You have Vicky Foxcroft spoke at a fringe event at the Labour conference yesterday and she was like praising Dawn Butler's push to get rid of the aim to permit laws and a part of the gambling act. So I think from her point of view, although she's a new gambling minister, she seemed to be on the side of some of the gambling lobbyists.
In certain aspects. John Healy, the Chancellor, he has spoke of his admiration for Gordon Brown in the past. And the former Prime Minister Gordon Brown was one of the key advocates for increasing remote gaming duty previously. So, again, that's sort of a strike against the gambling industry. We have seen though on the right the political spectrum in the UK, the Conservatives and Reform under Nigel Farage, they both sort of there's where some of the support has come from. Kemi Badinock in the last few days, a Tory leader.
has accused Andy Burning of cannibalising the high street by hiking these taxis. So I think that although not being in power gives gives like the Conservative Reform not a lot that they can actually do, but it may be something that gambling can jump onto that you have these opposition parties coming out in favour of the gambling industry and maybe they can harness that in some way to get a little bit of support.
speaker-2 (10:17.838)
I think that with in terms of the lobbying as well, like gambling is seen by maybe the majority of people in the UK as a as a social harm, really, and you can see why people do have that that opinion. But the the lobbying against tax rises has always been a little bit, you know, there's kind of been a lack of cohesion at times. And and this route that the the BGC is taking, that Fred Doan's taking in terms of making people aware.
that people are losing jobs because of this. The kind of the the things that people can actually sympathise rather than saying, the, you know, we're pushing people onto the black market because, you know, Joe Bloggs in the UK doesn't know what the black market is. So it it doesn't mean anything to people. So I the the route the as I say the route that the BGC is taking in terms of making sure that that people can actually you know empathise with with the sector or sympathise with the sector even.
is one that that should be taken rather than going white rather than taking the black market route or talking about how much impact this could have on your bottom lines because because that's not really going to make people feel sorry for the industry.
speaker-0 (11:31.966)
Yeah absolutely. Absolutely. There's of course a lot to consider in the in the in the middle, but it's certainly an easy target for the government to to go to go for the the gambling industry I mean. but there's a lot of implications for this machine games duty potential rise and amid a very intricate situation in the United Kingdom. So right now we're gonna do a very quick outbreak, but we will be right back to continue this.
discussing Britain and the gaming industry.
speaker-2 (12:04.398)
Yeah.
speaker-1 (12:04.95)
Okay.
speaker-0 (12:07.79)
Mm-hmm.
speaker-0 (12:11.37)
And we're back with more iGaming Daily to continue discussing the the gaming industry, a potential machine games duty increase, doubling the government threatening to doubling the the machine games duty. So what I think about this is that it's not only about machine games duty, right? It's it i it it
what could the potential effect of of this tax increase for the the local betting shops have on on greyhound racing, on on horse racing? what do you what do you see it do you see it impacting those segments at all?
speaker-2 (12:50.938)
Yeah, massively because they're so intertwined, aren't Right? We talk about this a lot. But I think there's the Greyhound industry is now lobbying against this this tax increase in its own in its own right. like more than a thousand people within the industry have signed a petition to s to to stop the levies, and you can see why because because of how reliant, particularly Greyhound and racing and horse racing is on money.
coming in from betting not only from you know on course bookmakers but think about how many races in those two two sports are sponsored by betting companies and if you if an increase in in another duty on the on the industry is impacting the bottom lines one of the first things that's going to go is is marketing for these kind of I supp you can't really call horse racing a lesser sport but I I think we've kind of seen a a
a push towards marketing in football from a lot of the big gambling companies so you can you can imagine that that sponsorship money towards those two two sports will will decrease. Think about the impacts on the horse racing levy which is which is so important for that sport. You know it's and it's not just those two as well. I mean if you you could you only have to look as far as as rugby league as this as as the Super League to see that that that Bet Fred have announced that they're cutting their
the the headline sponsorship of the Super League. These these tax increases aren't just impacting the gambling sector. It's not just, you know, let's celebrate because the the gambling companies are are being taxed more and their their revenues are go their bottom lines are gonna be gonna be slimmer. It's impacts on the entirety of sport really. I mean I think you'd think like I know there was warnings about the
the front of shirt ban in the Premier League, but you'd think that the the Premier League with its stature would would probably survive without without gambling sponsors, but but some of these sports that aren't as big as as the Premier League and aren't as global as the Premier League will be under massive pressure even further if if this sponsorship money isn't coming in.
speaker-0 (15:10.446)
Yeah definitely it definitely impacts a a whole lot more than just gambling. but while this is happening with the machine games duty, we have also seen an increase in a major tax hike for the eye gaming industry, Chris. So does this mean or or could this mean that we are looking into like a restructuring of y the UK gambling economics rather than just seeing yet another isolated
speaker-1 (15:43.918)
Yeah, I think it's definitely some sort of restruction because nothing really works in silo in terms of if your bet Fred a t a a ta tax riding in one area impacts what they can spend in a different area as well. if you look at the economics of most companies, a large proportion is online, especially online casino slots. they provide it can be even be as high as seventy five percent of revenue compared to sports betting. So you could just get to the point where these companies choose to solely rely on
what they get from online casino rather than and maybe abandon the retail side and say look it's it's not worth a hassle, it's not worth a tax. There's also national insurance hikes and things like that on the cost of employing someone. So I think it definitely gets to the point where companies are gonna have to re- sort of reevaluate what their business model is and look at areas with the least overheads and how they can maximise them areas to maximise revenue.
speaker-0 (16:38.954)
Speaking of maximizing revenue, investment, like international operators, someone may be looking into or may have been looking into investing in the UK at some point in the past, but right now all I see is tax increases, tax increasing eye gaming, potentially doubling machine games duty. How does this land landscape affect the the the the perspective of international operators looking to invest
in the UK is it I I mean it's probably making it less attractive right now.
speaker-2 (17:14.528)
Absolutely, yeah. But I think that what's a point worth making is that it's not limited to the UK. I think you you look across Europe and the the the tax rates in in places like France or the measures being implemented in Spain, and you only have to look as far as Brazil this week, right? Right. So it's a it's a tricky path to navigate for international operators anywhere at the moment, I think. What you have got with the UK is that there's there's still clearly a massive appetite for gambling from the general public. I think it was seventeen and a half billion gross gambling.
yields in the the UKGC's recent annual report. Now there was a slight de decrease in actual operators in the UK and you know we continue to talk about the decrease i in physical betting shops.
speaker-0 (17:57.73)
Well.
speaker-2 (17:59.106)
You can't kind of dismiss the fact that there still is a l a lot of people in the UK that are aware of gambling. It's been a a regulated market for such a long time and it's still I think it's the second biggest in the world behind the US. So you while the t the tax increases are are kind of something that you you need to take into account for for an interla international operator who thinks that they can take enough market share to be sustainable in the UK.
it's it's still a market that that people will want to move into. Whether, you know, this increase in machine gaming duty and possibly further headwinds down the line impact that, of course it'll make it less attractive and it still is less attractive, but I think, as I say, a lot of places are are a lot of markets are ones that that that have headwinds for operators within them. But yeah the the
the current government under the current government I can't imagine the the
a a gambling operator or a gambling company will will look at the UK and find it any more attractive than it was before this government came in because it looks like we do kind of have a a a government that is is dead set on using gambling as as kind of a an easy win to to generate tax revenues for stuff like free social care, which is obviously massively important which is something that that this government wants to do. But but picking on an industry that that kind of the the general public don't have a massively
great perception of is is something that you can definitely see see occurring.
speaker-1 (19:36.214)
I think there'll be some that see as an opportunity as well. The larger companies because quite a few have talked about consolidation in the market. So I sort of see the smaller operators go by. You look at Bally's and what they're doing with Evoke at the moment, there is an opportunity there for the larger companies to sweep up the people that are leaving the smaller operators. So in that regard there is still opportunity and like Patrick said, they're striving for the UK market and what he's gone in his favour is the appetite for a better than gaming.
in the UK, the sports structure we have here with all the different types of sports, the fact that the Premier League is based in the UK and things like that. There is definitely opportunity. It's just whether who has sort of the capital and sort of is willing to take the risk on what will happen next.
speaker-0 (20:23.179)
And actually the labor the Labour Conference has put the policy discussions in the spotlight again. what should the industry be looking about, the the labor conference?
speaker-1 (20:36.206)
I think it's an interesting one because as much as in our world the major thing at major talking point at the moment, especially for the UK, is gambling tax, but when you look at what else Labour is dealing with in terms of general economic downturn, sort of like geo geopolitical tensions elsewhere that we've sort of found ourselves part of through various reasons. It may not be the top of the agenda for Andy Burnham and the higher ups within the Labour Party, but at the same
Time as we said before, gambling is being seen as an option or may well be seen as an option to increase tax. So I think it will definitely get mentioned at some point and it will just be interesting to see which way that goes in terms of if there's any sort of def definite hint that the taxes will come into play or if actually there's more talk around him to pimp the proliferation of betting shops, other measures that Andy Merton seems pretty set on to for.
to decrease the visibility of gambling on the high street.
speaker-2 (21:38.958)
I think I think that what we what we saw from that or what we what was discussed before it on this podcast last week when that lineup was announced, I think it's worth noting that that I think it was Joe and Ted kind of said that it massively risks creating an echo chamber which by the sounds of it or from what I've listened to, you know, that's it that's kind of ex exactly what happened. It's there was no kind of voice to to show to stick up for the industry really. I think
Is is obviously it's always worth discussing the the the societal harms that that that that gambling can can cause for certain people but I think what what happened and you know it sounds like what happened is that there was just you know, it was all people advocating for further reform and there's there's for me there's no kind of well what's what's the use in that really? There's there's no for and against argument there is there?
Right.
speaker-0 (22:39.694)
And before we go, what should the industry executives be preparing for beyond the autumn budget and how will how will you guys be following these stories of of tax increases in the UK?
speaker-1 (22:55.206)
Yeah, as I said at a start, I in my opinion, I think it feel it's fairly fairly certain at this point that there will be further taxes on the industry. So just as last year, it would be very interesting to see what the Mitigate won, what they predict that the financial impact of the tax risers will be because we saw
After increasing remote gaming G it was like into the hundreds of millions of pounds in terms of how much that will cost each company. So that will be interesting and also what further mitigation leaves they can pull because we've seen that companies are sort of getting rid of people, they're closing shops, they're cutting down on marketing efforts, things on them lines, and at a certain point there's only so much you can do to mitigate these tax heights before they really get felt by the company. So it will it will definitely be interesting to see.
see what other levers they can pull to try to insulate themselves from the heights as much as possible.
speaker-2 (23:49.166)
Yeah, I think that the given the the warnings around the the retail betting industry that's always that's something g we definitely need to keep an eye out on. I know there's been headwinds for that for retail betting before and that it's it's survived but it's still on the on the decline. I think if it if this comes in and like Christine says I'm I'm of his opinion that it it will come in and of what actual impact that will have, whether the projections will will come true. But I also think
I think if if this tax comes in, I think it will be interesting to see where we are this time next year. I know we've not seen the full impacts of like the World Cup, but the remote gaming duty increase came in just before that, and the World Cup kind of offered a customer acquisition strategy and maybe a customer retention for particularly large operators. Now, again, as I say, we've not seen the full impact of that, but you know, next year we don't really have that. We don't have the world's biggest sporting event doing.
So whether that that this time next year we will we will see dramatically kind of decrease revenues or decrease profits, decrease DBITA will be will be very interesting to see. But it's it's again it's not looking very very promising is it right now?
speaker-0 (25:05.166)
It is definitely not, but we will have to hashtag wait and see what happens with the tax situation in the UK. Make sure you follow you subscribe sorry to all SBC media newsletters, especially iGamingExpert and SBC News, to follow this developing news very closely. And of course follow iGaming Daily on social media and subscribe to it on your preferred podcasting platform. But Chris, thank you very much. pleasure to record this episode here in Lisbon.
thank you very much, producer NA McDonnell, I'm Fernando Not and to our listeners out there we'll see you in the next one. Goodbye.