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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Fernando Noodt (00:08.904)
UK gambling remains fixated on taxation following a roller coaster 24 hours across Britain's political spectrum. Recently, the Times reported that Chancellor John Healy could opt for a 5% point increase in machine games duty, taking the standards rate from 20% to 25%. The report cited unnamed sources, and the proposal remains unconfirmed.
Meanwhile, political block Guido Fox has challenged the evidence underpinning the Social Markets Foundation campaign to double MGD to forty percent, questioning its projected four hundred and fifty million pounds tax windfall. Across the industry, gambling trade associations have urged Labour to reconsider further tax increases following Flutter Entertainment's announcement that fourteen hundred roles across the UK and Ireland are under review. With budget due on Wednesday.
The twenty eighth of October, are gambling's neuroses hitting its peak as the industry braces for its yet another tax judgment. Welcome to iGaming Daily, where we will discuss this and more on today's episode brought to you by Optimove, the creator of positionless marketing and number one player engagement solution for iGaming and Sports Betting Operators. I'm Fernando Nott, Media Manager for SBC, and today I'm joined by SBC News news editor Ted Ormclay. Ted, how are you today?
Ted Orme-Claye (02:17.047)
I'm good, thank you Fernando. Yeah, I've been off for a couple of days and come back to some pretty heavy news, yeah, coming out of Flutter that I you guys covered on the podcast yesterday. yeah, obviously the budget's only a week away, so yeah, it's looking set to be a pretty hectic week for the industry and indeed for us, I'd imagine.
Fernando Noodt (02:37.089)
Yeah, absolutely. A lot to come, a lot to report both on SBC News and on iGaming Exter expert, sorry. and for that we have Joe Schreeder, editor for iGaming Expert with us today. Joe, how are you today?
Joe (02:51.353)
Yeah, I'm good. Thanks for obviously a fast moving situation in the UK. Still a little bit of time to go till the budget. This is nothing more compared to the last budget, right? And Ted will attest to that. That was quite the lobbying, quite the disaster for UK gambling. It will take a lot to match the scale of calamity that occurred last time under Reeves and Stammer, but still, yeah, challenging times and think continued instability for UK gambling that, yeah.
gonna wanna see the back of.
Fernando Noodt (03:26.093)
Yeah, absolutely. And like we said, it's been a roller coaster few hours for for UK gambling. So let's start at the beginning, let's discuss exactly what has happened and what has been the reaction from the different parties, media, leadership, trade bodies in the UK.
Ted Orme-Claye (03:50.288)
Well, I mean, so far from what we know, it's... We're still seeing lots of things come in as reports and rumours. I mean, it's not even really... Correct me if I'm wrong, Joe, but it's not even been fully confirmed by the government that there will be an increase in machine games duty. It's just...
different media outlets who have sources within the Treasury, being the main department responsible for this sort of stuff, maybe some other departments as well, who are kind giving them tip-offs about what some of the conversations are about. The recent one, well, the one that me and my team broke earlier today, Victor wrote this up for us this morning, the latest report comes from the Times, and as you said, that suggests that MachineGames' duty will only be increased by five percentage points.
Really in comparison to a lot of the other scenarios we've been seeing this is
I guess we could say this is a win for the industry. we've come to the conclusion that some kind of tax right is inevitable, this is way better than the scenario that the Social Market Foundation were calling for and that lot of the lobbying is focused on. The BGC, the Bettingham Gaming Council, was talking a lot about the impact this would have on companies, the job losses that ensue. They were talking about a 20 % point increase
in machine games duty would lead to I think it was 3,800 job losses at least. So obviously 5 % is comparatively better than that. However, at the end of the day, I'm not saying this is a win because 5 % percentage points is still 5 % points more than the industry would want the tax to increase by. They're still adjusting to the increase in remote gaming duty from April, getting ready for the increase in general betting duty for next year.
Ted Orme-Claye (05:43.23)
seen marketing budgets cut, we've seen redundancies announced, obviously the biggest one being the one we mentioned earlier, the flutter ones announced yesterday, this is just another, even if it might be smaller than the worst case scenario, this is still another cost that the industry is going to have to factor in and it is one that will lead to budgets being slimmed and probably headcount being slimmed too.
Fernando Noodt (06:06.731)
Yeah, it's for sure at least a glimmer of hope. Yeah, go ahead, Joe.
Joe (06:06.841)
Yeah
Joe (06:12.107)
Yeah, I'm going to, I'm kind of, you know, Ted's, Ted's answer that was a little bit of a roller coaster, dare I say as well, because, you know, he started off with a, you know, portraying it as good news and yeah, I'm happy that he kind of backtracked a little bit by the, by the time he got to the end of his opening monologue. And it is not good news really, I think even 5 % when it was touted to be 20%. I still think it's bad news because as Ted mentioned, it comes off the bat.
Ted Orme-Claye (06:28.067)
Ha ha ha.
Joe (06:41.337)
of remote gaming duty rises, betting game, you know, there are a myriad of challenges for the UK gambling sector. And this would be just another one, a 5 % rise, a further rise on a retail sector that contrary to kind of government narrative and media narrative is in battle at the moment and is struggling in many ways. So yeah, I think 5%, as the BGC said, and I know we're going to go into that.
is still a challenge for the industry. think it's still a tough break for the industry because it comes off the back of rises during the last budget that were quite astronomical. And yeah, also, we know that flutter redundancies are, they're not rumored, they are happening. They were confirmed this week. They are not to do with machine games duty. This is a separate issue to that. They are to do with.
remote game duty, they are adjusting to the tax rises that are already implemented. Further tax rises, whether it be 5%, 10 % or 20 % would only serve to escalate that challenging environment for the gambling industry. yeah, you know, this is not a bluff. They would undeniably lead to more shop closures and as a result lead to job losses, sadly, something that...
needs to cut through to the government, especially as it continues to kind of focus on employment as well.
Fernando Noodt (08:17.901)
So I guess go to SBC News if you want to read a more optimistic take on the on the five percent tax and a a more pessimistic one on gaming expert. But moving forward, there was evidence brought into question from the SMF recently, so what what has happened there?
Joe (08:22.883)
Hey.
Joe (08:38.379)
yeah, this is an interesting story and interesting little development over this kind of wild news cycle of 48 hours. you know, Guido Fawkes, which, yeah, Ted, how would you describe Guido Fawkes? Guido Fawkes is a, an interesting kind of news publication, right?
Ted Orme-Claye (08:57.463)
alternative media perhaps? that a way you'd describe them? I mean they've been around for a while haven't they Greedo for about 20 odd years but yeah sort of more alternative media they focus a lot on investigative kind of areas that they'll have done tends to have I'd say a right-wing political leaning on a lot of issues I think.
Joe (09:02.775)
Yeah, think that's fair.
Joe (09:22.059)
Yeah, I think that's fair. I just want to kind of portray to our audience that this is not Sky News or the BBC, or this is kind of an alternative online news platform. But a really interesting report nonetheless. They kind of had a copy of internal SMF documents that were and discussions around the evidence put forward to the government that proposed
for machine games duty. Now, how impactful the proposals of the SMF were when it comes to machine games duty, we don't know. We know that they probably had an impact when it comes to remote game duty last year. But yeah, how impactful these were, we don't know. yeah, essentially, it kind of discusses around...
some of the proposals and you see some of the discussions from lead people at the SMF where they talk about jobs and job creation as a result of a potential rise in machine games duty. Yeah, and they kind of have to push back on that. And I think we've seen that over the past 48 hours as well with the redundancies at Flutter.
The other thing is, I think, which is interesting from an industry perspective, the SMF internal discussions are very dismissive of the black market describing it as a boogeyman, which, I think we knew that off the back of the lobbying process for the remote gaming duty last year and last year's budget, that warnings of the black market are failing to kind of cut through to policymakers and...
to this kind of anti-gambling lobby, or gambling taxation lobby, whatever you want to call it. So yeah, quite interesting there, quite interesting for sure. And also I think from some quarters, it should be noted that the Guido Fawkes story was kind of dismissed by people at the SMF online. And so I saw some takes on from this kind of...
Joe (11:44.782)
Yeah, gambling, this lobby, this the kind of SMF corners of lobbying around the flutter job cuts that, you know, they were they were portrayed as AI and AI job cuts in.
Joe (12:06.221)
Yeah, I saw some of them that were dismissive of the Flutter job cuts as well as not a result of taxation and instead a result of companies and Flutter moving to AI, which is quite a wild take to me.
Fernando Noodt (12:25.549)
So I want to stay with the with the flutter with the flutter job cuts and is is this actually viewed by the industry as a as a wake up call, both from industry leaders and trade bodies or or or how are they are they looking into this situation?
Ted Orme-Claye (12:41.615)
as in a wake-up call for the government.
Fernando Noodt (12:45.965)
I have no idea. maybe we can just move on w from this one.
Ted Orme-Claye (12:51.855)
Forget I asked that question, let me jump in. I'll just interpret that in my own way. think regarding a wake-up call for, think the betting and gaming council and a lot of regulated trade bodies would certainly, I think would like to portray this as a wake-up call to the government, I think. As Joe mentioned, Flutter has attributed these losses to the right...
rising cost burdens that they're facing both in the UK and in other markets but it was obviously in the UK to do with the remote gaming duty affecting their various online gambling businesses. We saw some kind of inkling that things were going to change at Flutter earlier in the year when there was some confirmations of redundancies at Paddy Powers marketing team I think and the confirmation of some shop closures as well. So this is that just sort of...
rolling along I think. But yeah, I think the industry itself would absolutely like this to be seen by the government as a wake-up call to the impact that taxation can have.
However, of course, the government will have its own opinion on this. They've got their own priorities as we've discussed recently regarding the need for fundraising and investment and so on. If they see taxing another form of gaming as a vehicle to support that, there's a good chance they'll take it. We obviously do also know that the current administration definitely has some opinions about the societal impact of gambling. We saw that in the conversations around the aim to permit rule
in the retail space and a lot of conversations about giving communities, local government greater powers to stop betting shops and adult gaming centers setting up in the local areas.
Ted Orme-Claye (14:44.781)
You know, that is a sentiment that a of the decent chunk of the general public probably agrees with, that, you know, this is a high risk industry. It will always prompt concerns about its societal impact and its association with harm. And this government definitely seems tuned into that, which I think makes them a lot less sympathetic to some of the industry's concerns about its finances and sustainability. The big one is going to be how they consider job losses in there.
that will be the big deciding factor.
Joe (15:17.529)
Yeah, if I can there as well. I think this is about more than just tax rises and specific nuances and intricacies of how different taxes affect the market and affect operators. You will attest to this from Brazil as well. This is about market stability. We're just kind of adjusting to massive new tax rises in a whole new environment.
And then the industry is going to be hit with more tax rises. Now, however much those tax rises actually impact operators, think one thing that it will do is it destabilizes the market again and it will dwindle appetite for the market because you just don't know what is around the corner and the market becomes this kind of unpredictable beast that is not one that operators want to settle in or...
It becomes one of the less attractive markets in Europe. guess many European markets are kind of following this trend, so there aren't too many appetizing markets in Europe at the moment. I think rather than just in isolation, this tax, the machine game duty being a rise and impacting operators, I think it adds to a whole cauldron of uncertainty and just instability within the market.
Yeah, and I think that's kind of what we've seen in Brazil, right? Where the betting market will come back and according to many, the betting market will come back. But still, as a result of this kind of volatility, will it ever be the same again? I think, yeah, you could see that in the UK as a result of just wider kind of uncertainty and constant changes.
Fernando Noodt (17:12.875)
Yeah, I think you you you hit the spot there with uncertainty, that's the word, that no industry wants to hear. no industry wants to to have uncertain uncerta or be uncertain about the rules that that that govern their their their operations and that's exactly what's happening with with the gambling industry, which tends to be a target for governments when they need tax money. so it's no surprise that we can we can find a a a link between
between the UK and and Latin America. But right now we're gonna do a very quick outbreak and we will be right back to continue discussing more about this online gaming daily.
Okay, I'm gonna jump straight to seven. Ahead of the budget has a full picture of impacts being presented to Chancellor Healy. Does this matter? Could this see him take another approach?
Fernando Noodt (18:09.323)
So this is gone.
Can I scratch this? No, looks like I can't.
Okay. And we are back with more iGaming Daily to continue discussing the news out of the UK where the tax increase potential the potential tax increase has the industry where it and of course we are near the the budget date, the date of the autumn budget. So ahead of it, do you guys think that or or has the full picture of impacts actually been presented to Chancellor Healy?
and and do you guys think this matters and and if if this could make him take a different approach from the one he has right now?
Joe (18:56.633)
Yeah, absolutely. listen, I don't know what has been fully presented at number 11 to Chancellor Healy. I couldn't speak for that. I have no idea. But what I will say is the industry has done a fairly solid job of kind of warning of the wider implications and that, know, raising these taxes won't necessarily increase the tax intake and certainly won't necessarily be a boost to the economy. If you look at
Ted Orme-Claye (18:58.372)
your
Joe (19:26.551)
things around sports sponsorship and shop closures. I think the industry has done a fairly good job of kind of laying out the wider consequences, particularly when it comes to things like the Super League sponsorship with Betfred. Yeah, there are significant consequences as a result of another tax hike to machine games duty.
I think, you know, one thing I kind of, if we talk about that time story from this week as well, I think one of the things they highlighted and one of the kind of, you know, things that is being pointed out in this is the impact on racing. Ted, I know you're obviously the SBC news guy here. Yeah, well, this would be consequential to racing, right? Even if I look at kind of the BGC quote from today, any further tax increase would keep more pressure on the industry already facing tax.
substantial tax rises, threatening jobs, high streets, and vital funding for British racing. Yeah, they are keen to point out the impact it would have on racing. that would be massive,
Ted Orme-Claye (20:35.715)
Yeah, very much so. mean, well, Joe, you and I both worked in betting shops in the past. Racing is very core part of our product. Horse racing is a sport in the UK. It's heavily financially dependent on the betting sector. You know, the two are intrinsically linked, as people often say. Horse racing gets its funding through the annual betting levy where...
Bookmakers pay a percentage of their profits into the sport due to obviously the amounts of betting volume They get around horse racing horse racing is still the second most bet on sport in the UK after football So yeah, very significant there and then like I said a huge amount of this revenue does come through the betting shops Which do which are oriented oriented around horse racing and admittedly also to greyhound racing as well, which is very reliant on the
and then on top of that the sport also benefits from sponsorship of its races and its meetings by betting companies. We've seen some of the budgets get cut there as in operator marketing budgets.
Which has seen some sponsorships cut however we have seen one or two new ones actually signed So it's not like it's been a complete wipeout there But it is something that the sport will be quite concerned about there's any sort of change in dynamics And yet like the lack of a third and final piece of this is going back to the betting shop side of things The sport gets a lot of money through through media rights payments So the companies that own the media rights to its races are then sold to betting companies to show it in the shop
and obviously take the bets on it. That's a very important part of its financial structure, the way it makes money. yeah, closures to betting shops, widespread closures to betting shops would result in the sport losing chiefly that betting levy money through the shops themselves. It would have resulted in a massive drop in media rights payments.
Ted Orme-Claye (22:36.339)
through the streams that are broadcast in the shops and then it would continue to complicate that sponsorship relationship too. So yeah, I feel like I've gone a bit overboard on this job but yeah the sport is very very concerned.
Joe (22:42.391)
Yeah.
No, no, Ted, I was going to ask actually, would you say that's the one possibly the one blind spot? I for us the question, you know, has has kind of the industry done a good job of laying out the wider consequences? You mentioned the media rights side of things. Would you say that's possibly the one blind spot that in terms of, you know, laying out the consequences and kind of letting people know what the actual impact of this will be? know about we've heard about shop closures. We know about
sponsorships, you know, and job losses as well. But yeah, in terms of media rights, that funding for racing, that's probably one of the lesser put forward cases, if that makes sense.
Ted Orme-Claye (23:30.999)
I think it's probably out of those three, it's probably the one that's talked about the least in the mainstream media conversations around this, I'd say, And maybe the sport and the industry could benefit from talking about that more perhaps, yeah. Yeah, it is very significant part of it.
Fernando Noodt (23:51.746)
Do you guys see UK gambling surviving another year of tax anxiety at every autumn statement, or has this annual budget new Roses become the new the industry's new norm?
Ted Orme-Claye (24:08.473)
question. I think it will always survive in some form but I do think we are going to see some pretty big structural changes in the industry. We will see some more consolidation. We're probably going to see a lot of smaller companies get even smaller perhaps even fully close their doors. I think
Bit of a gloomy outlook to it could be just be this will just become an industry for the big players the big Multinationals who can afford to keep it as part of a wider portfolio Obviously, there's probably some room for some smaller and medium and mid-sized companies who might Learn to be agile and quite strategic and find the correct niche But it's going to become a lot more difficult for those companies a lot more competitive. Definitely
Joe (24:55.469)
Yeah, I'm going to follow up there. Sorry. Yeah. Yeah. I'm to follow up there and just like, obviously it's quite a wide question. And, you know, I do obviously think, you know, UK gambling will survive. I think the black market will, will grow. That challenge will escalate. But I'm kind of going to, you know, we started this talking about machine games duty and that is what is at the behest of the budget next week. But
Fernando Noodt (24:57.293)
I guess we'll have to go ahead.
Joe (25:23.659)
I think retail betting, think retail betting is at a real risk. think there were some quotes from Fred Dunn, you know, a month or two ago, you know, and he was very clear that retail betting is at real risk of, yeah, essentially going extinct. And that would be a shame. And it gets a bad rap, but that would be a real shame. think betting shops have a big part in the high street.
They do play a role in communities as well. I think retail betting is at real risk if you start being too aggressive with machine games duty.
Ted Orme-Claye (26:12.099)
The truth, if I can just talk here about, know, we do talk a lot about the community element. It is something that think the industry's lobbying has started focusing a lot more around it rather than the black market, which I do think was a clever move because like you said earlier, Joe, the black market argument has clearly been falling flat over a number of years. The trouble, I think, with the new focus on community, however it relates to machine games duty, is that it's easy to talk about the community side when comes to sports betting and retail sports betting because obviously people come in
Joe (26:21.047)
Yeah.
Ted Orme-Claye (26:42.063)
they talk about the sport, talk about the racing, you know, they'll have a coffee together, they'll put a bet on before they go to the pub to watch the football match or whatever. It's harder to frame a slot machine within that conversation and I do think this is where the lobbying has been coming up against a bit of a hurdle ahead of this budget because a lot of politicians and a lot of the general public and so on are going to be looking at that and thinking well...
How is a gaming machine, how is a slot machine beneficial to my community? Obviously we know the answer there is that these prop up the betting sharps and maintain that but it is a difficult one to square off there I think.
Joe (27:14.435)
Well, yeah, it's just, yeah.
Joe (27:22.903)
Yeah, and it should be noted as well that, you know, when it comes to kind of gaming machines, significant steps were taken, you know, good number of years ago, you know, reducing stakes on FOBTs. But yeah, I do know what you mean. I, you know, I agree with you wholeheartedly that the approach of the industry, I've seen some good videos from Jennings Bet, from Entain, around various shops and
Ted Orme-Claye (27:40.643)
Yeah, true.
Joe (27:52.313)
the roles they play in people's lives and not just people that work there, but people that come in every day. And you will have seen it Ted, working in betting shops with punters, just more coming in for the social aspect for a coffee. Placing a kind of 20 P lucky 15 and having a chat as part of their routine, especially for an older generation. yeah, I think that change in approach of...
I guess lobbying, laying out what the industry does has been vital.
Fernando Noodt (28:27.437)
We'll have to hashtag wait and see what happens with the autumn budget with the tax increases in the UK and the impact they have on the gambling industry. But to keep up with this story and more, make sure you are subscribed to all SBC media newsletters, including SBC News and iGaming Expert, and of course follow iGaming Daily on social media and your preferred podcasting platform. Ted Orm Klay, Joe Streeter, thank you very much for this thorough
analysis on the on the situation of the UK. Of course there's a lot more to come, so we will be addressing this more in the future most likely. So thank you very much. Thank you very much NA McDonald for producing this episode. I'm Fernando Not and to our listeners out there we'll see you in the next one. Goodbye