The wrath of the widely speculated UK gambling tax increase is set to be felt not only by industry operators, but also the already embattled hospitality industry, which utilises fruit slot machines as a source of revenue.
Sir Tim Martin, the Founder of British pub chain JD Wetherspoon, issued a warning to The Times that a tax hike on machine gaming duty (MGD) from 20% to 50% would raise concerns for the hospitality industry.
The 50% figure for MGD is part of a report from the think tank, the Institute for Public Policy Research (IPPR), which has also called for online slots tax to rise from 21% to 50%, for general betting duty levied on bookmakers to increase from 15% to 25% and for general betting duty rates and horse racing betting levy board rates should stay at 15% and 10%.
In addition, the IPPR proposal has been backed by the former UK Prime Minister Gordon Brown as a way to help fight child poverty.
Chancellor Rachel Reeves is widely expected to include a tax increase on UK gambling when the Labour government announces its autumn budget on 26 November, but the figures for which duties will be increased remain to be seen.
The Times has noted that if the IPPR figures on MGD are used, Wetherspoons’ gambling duty bill would grow from approximately £27.5m to £45.7m for the year just gone. Based on its current gambling revenues, Martin stated that the chain’s total post-tax profits would decline by 48%.
Even though Wetherspoons’ fruit machine revenues rose by 11% year-over-year in 2024, Martin claimed that they contribute a lower share towards sales than in previous years.
However, Martin’s comments against the increases are just part of a collective pushback from the gambling industry over the past couple of months.
Industry tax pushback
Rank Group Chief Executive John O’Reilly said last month that the group is paying its “fair share” in tax.
As part of the company’s first quarter of 2025/26 trading update (1 July to 30 September), O’Reilly expressed confidence for the financial year ahead and noted that Rank and the Treasury have been in talks about how a tax hike could impact its operations.
The Chief Executive said: “Speculation regarding tax changes in the upcoming budget is, inevitably, hanging over the business. We are engaged with the Treasury on the implications of tax changes on the viability of our venues, employment levels, future investment and the customer.
“Last year the group generated £44.6m in profit after tax, having paid HMRC and local authorities £188m in taxes. The Rank Group, with its strong UK focus, is certainly paying its fair share.”
The Betting and Gaming Council (BGC) has pushed back against a gambling tax increase as well, recently publishing a report by PricewaterhouseCoopers LLP (PwC), produced on behalf of the BGC, which examined markets across Europe that have taken a similar path.
PwC’s report noted that a tax increase could lead to operators’ prices increasing and less money being spent on marketing and bonuses, which could in turn impact channelisation rate as well, with players switching to unlicensed operators.
BGC CEO Grainne Hurst also argued against gambling tax increases during a Treasury Committee parliamentary hearing in October.
Hurst said: “The industry has a lot of regulations in place voluntarily and the white paper to raise those standards. We track behavioural triggers, late-night play, chasing losses, so we make sure players are staying within the regulated space.”
However, the committee seemed to be unconvinced by industry arguments, maintaining a sceptical stance regarding the BGC-commissioned research throughout the hearing. The mainstream media also heavily criticised the standards body for defending the industry, particularly their strong refutation of gambling’s role in causing social harm.
Stakeholders in the gambling and hospitality industries have just over a week to wait before they find out just exactly how the autumn budget will impact their operations.
