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A daily podcast delving into the biggest stories of the day throughout the sports betting and igaming sector.
Charlie Horner (00:01.494)
In just over two weeks' time, Andy Burnham is expected to become the next Prime Minister of the United Kingdom. The sixth Prime Minister in a turbulent decade of British politics, Burnham will arrive at Downing Street pledging to revive local economies by decentralising power from Westminster and returning greater control over key public services to local authorities as part of a wider drive to ease inflationary pressures.
That agenda coincides with a proposal from the Social Market Foundation to double machine games duty from 20% to 40%. A move that has alarmed Britain's betting shop sector. So, how serious a threat are the SMS proposals and are they likely to gain traction with a new Labour cabinet focused on revitalising Britain's high streets? Welcome back to iGaming Daily, supported by Optimove, the creator of Positionless Marketing.
Ted M (00:34.107)
you
Charlie Horner (00:52.682)
and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and today I'm joined by SBC Media's editor at large, Ted Menmure, and iGaming Expert Editor Joe Streter. Ted, how are you?
Ted M (01:07.035)
Very well Charlie, glad to be on the pod with Joe and ready to kick off.
Charlie Horner (01:13.656)
Brilliant. And yeah, Joe, good to have you on the show. how's things?
Joe Streeter (02:10.062)
Yeah, I'm brilliant. Thanks, Charlie. Yeah, obviously, you know how I am. You know, we talk about it every time we're in the office. I'm really enjoying the World Cup. It's been it's been a festival of football and yeah, but but I'm all good. yeah, interesting times in the UK politically as well, which always makes for a really strong news beat for us. So excited to discuss this today.
Charlie Horner (02:31.809)
Yeah, it's a an all-action summer. the World Cup going on, we're getting a a new Prime Minister. yeah, it's enough to keep us busy anyway. so look, we we thought we'd parked the the tax story back in in twenty twenty five with with that budget, but the SMF is back again and it wants a little bit more out of the gambling sector. Joe, how about you give us the the breakdown of of what's happened here and what what some of these proposals are?
Ted M (02:35.087)
Indeed.
Joe Streeter (03:00.624)
Well, mean, to be honest, you've really hit the nail on the head of the heart of this proposal, which is a double in machine game duty from 20 % to 40%. It would be a massive hit on the British high street. And I think what we're seeing is kind of the battle lines being drawn already on this. think we're prepared. There's, you know, deja vu on two counts really. One just about kind of a taxation battle when it comes to the...
to the iGaming industry. We saw this literally last year and there's no respite. I think the industry has been on the front foot in kind of returning fire, if you like, talking about how damaging this could be. I think, you know, if we kind of go into the context here, the budget last year, you know, we spoke about it a lot. I think it was obviously cited as a loss. goes down as an L, as the kids say, for...
for the industry, it wasn't good. But there were kind of mitigations made. There was one that was kind of, they took heed of the warning on the retail sector. And in some ways, the retail sector was shielded. Obviously, we know retail betting doesn't operate in isolation, it operates as part of a wider kind of operation. So it will be
It will be impacted by the tax hikes, but it was in some ways protected because of the high street because of jobs. Well, that axe has quickly now turned as we get a new premiership and it looks like we could see dispute around whether retail betting tax is going to rise. And this would be significantly damaging for the retail sector as well, because I think betting shops generate around 50 % of their revenue from
category B machines, they are the SMF, which is an, this is not just any lobby group. This is an influential lobby group is proposing goes their tax go from 20 % to 40%. So this would be a significant hit for betting shops that have had to recalibrate kind of twice as a sector, retail betting has had to recalibrate twice in the past kind of six or seven years. In 2019, obviously we know FOB tees
Joe Streeter (05:21.838)
The maximum stakes were slashed on FOBTs. I had just transitioned from working in a betting shop to writing about betting at that time. And that was massive. You really cannot underplay how significant that was for betting shops. That led to a steady declining in betting shops. The whole sector had to recalibrate off the back of that. Shops were closed. New approaches were taken.
I do still think even off the back of kind of not being directly taxed, gambling in the UK as a whole and the retail sector subsequently is recalibrating off the back of the tax hikes last year. But a further hit like this as significant as this, yeah, it could have a real impact and yeah, I'm sure we'll talk about it, but the political context of it, the political backdrop of it is also significant.
Charlie Horner (06:06.423)
Mm-hmm. Yeah.
Ted M (06:19.802)
All right, just, I just want to add, look, coming off kind of Monday's headlines, and to me, it's about the timing of the SNF putting in this proposal and putting it out to the Labour government in transition towards a new prime minister. You can call me cynical, but I feel that this is an attempt by a think tank to get some kind of first clout with a new premiership and placing or returning the spotlight back to gambling and its taxation. This never ends, Charlie.
Charlie Horner (06:49.941)
I fear it does never end and I I you know, I don't want to be too cynical either, Ted, but I I have to agree with you. I think this is a roll in the pitch from from the SMF to try and get some influence in just before the new Prime Minister take takes office, which, you know, as I said, it it's you know, just over two weeks until we we assume Burnham will will take office. just on that, w you know, Joel said betting shops are gonna be
Ted M (07:01.614)
Mm-hmm.
Charlie Horner (07:16.917)
you know, hugely impacted by this as well as adult gaming centers. Wha why target betting shops and and these machines now when the numbers show that, you know, the retail sector, as we've discussed quite a lot, is is struggling. They're in decline.
Ted M (07:33.339)
To me look the SMF argues that gaming machines remain highly profitable and in that
this should contribute more towards public services and helping reduce gambling related harms across communities. And that kind of aligns with Andy Burnham's kind of initial proposals or his initial vision of where he wants to pitch the UK's economic recovery at a local level and also kind of regaining back kind of economic key services to fight inflation. That was his pitch that came in on Monday.
And I think that this has been contested by the trade body, the betting and gaming council that rejects the SMS proposal, just simply too simplistic. And it doesn't take into account the reality of of betting shops and the dwindling margins. And that betting shops have also kind of, as Joe was saying, readjusted to the FOBTI charges, but also they're facing kind of increased business rates on the high street.
Charlie Horner (08:39.732)
Mm-hmm. So the Social Markets Foundation that the think tank behind this proposal estimates that revenue generated for the for the government could be around £275 to £458 million if if a forty percent tax is implemented. one of my key crit criticisms of this is you know
What is this for? Is it to minimize harm or is it to generate revenue? Because the way I see it, you you can't really have both. so I I just I w wonder w whether
I I kind of agree with the BGC really. It's you you can't you can't have your cake and eat it. But we know that the SMF is a particularly influential think tank. It's a cross party think tank. It was the one of the major organisations behind the remote gaming duty tax hikes in the last budget. I'm sure this is gonna raise anxieties right across the sector, you know, particularly on the retail side of things, but for for the entire sector, Joe.
Ted M (09:18.841)
Yeah.
Joe Streeter (09:44.976)
yeah, absolutely. one thing I would like to say, we're a little bit doom and gloom about the retail sector here talking, if you kind of bet the overs on how many times we said the word decline, you'll be cashing those tickets. feel like we've said it quite a few times, but what I would say is partly because of the tax rises last year, operators were kind of forced as a whole, not necessarily just as retail, they were kind of forced to relook at and reevaluate what they're doing.
And the retail sector became a little bit more of a fruitful opportunity for operators in the UK. You know, we saw with Bally's when they bought a Vogue, they kind of pinpointed, Robeson Reeves pinpointed the retail sector. did speak about the retail sector and he said, you know, that there is kind of an opportunity, not verbatim, but he said there is kind of an opportunity there. I think in the UK right now, as much as the retail sector since the FOB
FOBTI state cuts has been on this kind of turbulent path, minus this lobbying from the SMF, I think is in a place of somewhat consolidation, is in a place of stability and it can grow, can kind of, yeah, it can evolve and can really continue to, yeah, be on an upward trajectory. That, however, is all pushed to the side if...
you add another crippling constraint on the industry like this. And I think, you know, you raise a good point, Charlie, about the wider retail sector. And I think that's where this might fall down. This might not go through because there's kind of two sides to Andy Burnham here at play. And we're all, as a country, we're all kind of guessing about what kind of prime minister he's going to be. He was obviously elected.
without a manifesto, not that they're ever really stuck to anyway, but we kind of know a little bit about the man, right? We're not completely guessing. Obviously we know he's been a somewhat avid anti-gambling campaigner. He's not been a pro gambling person before. He's not even been a pro gambling on the high street person before. He's put his weight behind council calls to kind of close shops and to have stronger controls over shops.
Joe Streeter (12:09.924)
But he is a man of the North as well. He is a man of kind of Northern growth. And I think one thing he won't want is, you know, if you look at the economics behind this, one thing he won't want is shop closures on mass in the North of England, in the seaside towns. He won't want job losses in these areas. So I think he might hold caution and he might take heed of not just the BGC, but also BACTA's warnings.
when it comes to such drastic tax increases. Maybe I'm being optimistic there, but yeah, who knows?
Charlie Horner (12:48.748)
Mm-hmm. Yeah, we'll we'll get into the the political side of this a lot more in in the in the second half, Joe. But quickly before we go to to a break, Ted, where where do you stand on on this sort of tax hike? Do you is this is this a doomsday scenario for for the high street if it if implemented?
Ted M (13:06.266)
Well, first of all, I just want to reflect back on this is very much a pitch by the SMF. And I think this is much more to kind of regain Labour's eyes on taxation of the gambling industry. And as you pointed out, all of this to raise 450 million, this is peanuts. You could point out other kind of taxation policies that would amount, be easier to implement, would not affect job losses and could generate that amount.
I think that the SMF, from my reflections of them and how they've kind of pitched up towards gambling, for them the real goal here is to reopen the gambling review.
Charlie Horner (13:50.09)
Mm-hmm. Yeah, no, I I think I think you're you're probably right. And yeah, four hundred and fifty-eight million at the top end of the the estimations when when Burnham already needs to raise four point seven billion to just to fund the defence plans, it doesn't really touch the sides. But let's take a quick break, Ted and Joe, and we'll come back and we'll analyse the Burnham factor.
Ted M (13:56.591)
Yeah.
Ted M (14:05.741)
Mm-hmm.
Charlie Horner (14:15.113)
Welcome back to iGaming Daily. Now the SMF proposals landed just as Andy Burnham was setting out his goals for his premiership. Smith's lyrics in his tongue. you know, Mancunian clothes on on on display as he's set out his his stall in in Manchester. Ted, w what what is Burnham laying out as his vision to revive
Ted M (14:26.887)
Hahaha!
Charlie Horner (14:41.865)
the the UK. you know, a lot of this has has to do with devolution, doesn't it?
Ted M (14:46.937)
Yeah, so at the start of this campaign, he didn't get criticised for being quite opaque about what he wanted to do. And I think this week, by his speech, you kind of got a clearer picture of what he wants. And actually, it's actually not that separate to what Keir Starmer said, but kind of failed to deliver on. He wants a bigger focus on localisation, on...
definitely reviving the high street which again this is now coming up to the third premiership where this becomes a key factor. Now one of things he said in his speech is that he doesn't value all businesses as the same so that should be a worry to bookmakers he said that on one hand you do have cafes hairdressers
I'm trying to think of any other time. yeah, pubs. They always mention pubs, yeah? And he said then you have other types of high street businesses, which I think he kind of views gambling in. But I don't necessarily think that that means he's out and out for gambling. I think that from his time as local mayor, he always stated that he wanted, in terms of such sectors such as gambling, for the rights to be handled by the local councils and the councillors. And I actually don't
Joe Streeter (15:34.672)
you
Ted M (15:58.952)
think that that is as as aggressive or as kind of prohibitive as people kind of have laid out. Burnham again I think that he has to kind of the main question here is again how does he raise taxes or how does he treat the economy
to filling these kind of black holes in the British funds for public services. The other thing here is the fight for inflation, which he truly believes should be fought at a localised levels by improving public services and getting people back to work and improving social mobility. It's a high pitch by him. Whether he can deliver it, we'll see. He's got two years to deliver his manifesto.
Charlie Horner (16:46.953)
Mm. Yes, ambitious programme, that's for sure. yeah. Important that pubs were w were sort of omitted there because category C and D machines that you would find in pubs are not i included in the SMS proposals. But Joe, you said earlier in the the show that Burnham, when he was mayor of Greater Manchester, has you know called for greater powers over over gambling licenses, particularly on the high street. Do you think that makes him
anti gambling per se, or do you think he was perhaps parroting lines that might go down well with his base in order to to get a a good PR line maybe? Just do you think that in necessarily makes him purely anti gambling?
Joe Streeter (17:24.56)
you
Joe Streeter (17:33.296)
Um, yeah, actually, can I just respond to, you know, what you said about pubs there because BACTA had a really interesting line on that. were, they were quite, um, aggressive on, on attacking that kind of approach from, from the SMF. said that the SMF have tried to separate category B and C machines in order to avoid opposition from pubs and hospitality. That may be politically convenient, but is economically incoherent. You cannot carve up land-based
the land-based sector on a spreadsheet and pretend there will be no wider consequences. So yeah, quite interesting. And it is also interesting that pubs are kind of this thing.
Ted M (18:01.048)
Mm-hmm.
Ted M (18:12.281)
I actually really welcome that from back there. Because I think at one point you do have to say someone has to stand up and says, look, know, bedding is part of the high street, but it's how it's managed.
And I think that there is, we never talk about this in this industry where there is kind of, you know, we can reach a point of settlement between kind of, okay, the exposure of betting on the high street, but also have it kind of balanced out and say, look, these are the terms of play, this is how many. And at one point someone has to just show their hands and I'm I kind of backed up putting it there because it can't just be like, taxes to hell and then everything closes down.
Yeah, he you know, he may be I I do think he is sincerely quite an anti gambling Prime Minister. I d I you know, I don't think he's gonna be pro industry. I think when he kind of put his voice to those council calls last year and he he was part of that kind of lobbying effort for greater council controls over gambling venues and essentially to for less prevalence of gambling venues on the high street. I do think it was politically convenient, but he you know, he did it with sincerity.
I think that is part of his kind of belief. but you know, Ted, as we mentioned as we went to the to half time of this podcast, you mentioned that the wider the wider agenda of the SMF might well be to reopen the gambling review. although Burnham is someone that is probably not going to be a Prime Minister that is favourable to the gambling industry, he has a short term to start anyway. I do believe that.
the over the the wider goal of opening the the gambling review and opening that kind of worms again is too ambitious for the for the SMF. I don't believe the industry should be too fearful that that will happen again. b just just because of how much he will how much Burnham will have on his plate and how much, you know, he's got in terms of time as well.
Charlie Horner (01:25.389)
Yeah, okay, let's let's bring things towards a a bit of a close w by just talking about some of the the goals of of this this next government because we know it's a an administration that's going to need to raise taxes. W there are reports that Ed Miliband is gonna be the next Chancellor. and he he's known to be quite a an effective minister, but but perhaps his ideology puts him slightly more on the tax
increasing side of of the debate. Ted, do you think gambling is an easy target for for a Chancellor who needs to raise taxes?
Ted M (02:06.261)
I'm gonna return to the...
a lot of what kind of Joe said and I think look, okay, if you are Manchester mayor or a city mayor, your sound bites are completely different to when you're going to be PM. So I think you're to see a lot of changes in kind of how Andy Burnham talks about subject matters such as inequality, welfare and the economy. Also migration too. These are the stuff that, you know, they just keep on poking at Labour. Now in terms of the government, there's going to be a reshuffle.
Again, like we talked in the last podcast, the kind of all eyes go to that. Again, another transition for DCMS. Where does that land? I feel that.
We've this is a sector that's undertaken five years of viewing where the Gammon review and it's white paper recommendations will fall. And that hasn't happened yet. And that's why I keep on thinking that if you're the SMF, you look at the situation in the context of the industry and it says at one point, it just goes to that point of like no return where you just you might you're better off kind of restarting again. And I think that they're targeting that as a think tank and saying that that should be our end goal to kind of restart this issue.
talk about the compliance, talk about the tax, and talk about the governance of gambling license in the UK and how we can change that. Put simply, like we've said in I think every podcast since February, we really are in the unknown for UK gambling as stands.
Charlie Horner (03:42.765)
Yeah, I I totally agree. And as the administration changes, the uncertainty only only grows. not much optimism, I must say. I'm not not feeling like there's too much sunshine and sparkles for the industry at the moment.
Ted M (03:51.375)
Just make Harry Kane Prime Minister. don't know. Sing Wonderwall. We really are running out of ideas.
Joe Streeter (04:02.466)
Yeah. Can can't
Charlie Horner (04:04.769)
Interestingly actually, Ted I will say that I think More in Common did some polling last week, on all the political leaders in in the UK and Thomas Tuchel was actually the the the leading figure in all of that. So who knows what happened overnight, I must say. We don't know, but hopefully Thomas Tuchel got a few extra points on his on his polling overnight. but Ted Joe, that's all we've got time for today. Thanks ever so much for joining me on this one and I'm sure we'll talk
Ted M (04:20.591)
you
Charlie Horner (04:34.623)
very soon again about the taxation and re-regulation of the UK UK gambling sector. So you know keep keep tuned for that. thanks to Optimu for supporting the show as always and to our listeners. Thank you ever so much for tuning into today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.