Impact of an increase in Machine Games Duty (MGD), on the land-based casino sector, investment, and economic growth

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This summer the DCMS brought forward into legislation a much needed modernisation and deregulation package. The reforms comprising more proportionate gaming machine allocations and the ability to offer sports betting promised to support the UK land-based casino sector, enabling (£) tens of millions of investment, and contributing to the Government’s growth agenda.

When introducing the measures in the House of Commons in June, DCMS Minister, Stephanie Peacock MP, set the scene:

“The Government is focussed on economic growth…this package of measures will unlock additional investment up and down the country” and “will put the casino sector back on a stable footing” “We expect a number of venues to be modernised and refreshed…we also
anticipate this capital investment will be spent across the country not just in London…allowing this historic sector to thrive.”

And when introducing the same measures in the Lords, the Gambling Minister, Baroness Twycross said:

“Since being appointed, I have visited casinos and witnessed the contributions that they bring with jobs, tax revenues and support for the night-time economy. The sector generates £866 million in gross gambling yield each year, with up to 50% of this paid in gaming duty.”

The Minister went on to add that the modernisation measures are estimated to increase GGY by £53million to £58million.

The BGC casino group couldn’t agree more with Ministers.

This is why we are deeply concerned that all of this progress could be wiped out, at a stroke, if there is an increase in MGD, from the current rate of 20%, in the forthcoming Budget. An increase in MGD would fundamentally undermine the sustainable footing which the new policy reforms placed the sector firmly upon.

For example, Rank Group plc (Grosvenor Casinos), the UK’s largest licensed operator of casinos, has reported that 12 of its 50 venues were loss-making in the 12 months to June 2025. These casinos have been kept in operation in the expectation that their financial performance will be improved by this summer’s legislative modernisation.

By illustration, an increase in MGD from 20% to 25% would make a third of the Grosvenor casino estate unprofitable. As well as offsetting all of the benefit Grosvenor expected to gain from the land-based policy reforms, it would not be possible to sustain loss making venues, with up to 20 casinos being forced to close. For the remaining casinos, the planned investment case, announced at £60million per annum for the next two years, would become unaffordable.

Investment committed in light of the new policy reforms

With the new policy reforms industry embarked on a programme of substantial capital
investment to upgrade existing casinos and develop new venues. Great news for the sector,
our customers, and the Government’s growth agenda.
The promised stability enabled confidence for operators to make commitments for UK-wide
investments. Operators have collectively announced or confirmed investment of £300
million, including:

• Rank Group plc investment of £60million per annum for next two years, to capitalise
  on casino reforms
• Genting Casino £40million new casino at the Trocadero in London’s West End
• Genting Casino Westcliff £10million refurbishment in Southend-on-Sea
• Rank’s Grosvenor Victoria Casino £15million refurbishment and expansion in London
• Bally’s £3.7million, securing 170 jobs, first UK land-based investment in Newcastle
• Hippodrome £1.5million new Sports Book venue in London’s West End
• Other multi-million pound redevelopments of casinos in Brighton, Bolton, Coventry,
  Leicester, Liverpool, Manchester, and Reading.

An increase in MGD will inevitably lead to a reversal of these steps forward, plus casino closures and job losses. Operators will be forced to cancel investment plans and look to cut jobs as growth plans falter. The investment plans above would not see sufficient returns (and
may even lead to losses) with a direct and material negative impact on company financial performance across the sector. Current investment plans will cease, and future investment won’t happen. Overseas investors will be deterred, seeing the UK market as high risk for investment. And tax yield from the sector would reduce.

At 25% MGD, casino industry analysis shows that up to 40 casinos would close, with the loss of up to 3,500 jobs – equating to a third of the whole industry.

BGC casino group Budget submission

In our Budget submission (full copy attached) we set out for the Treasury the economic contribution of Britain’s land-based casinos and the significant challenges already facing them, which would only be exacerbated by further tax pressures.

More broadly, the sector is still recovering from the damage caused by the lockdown measures of 2020 to 2021. In the year to March 2024 (the most recent period for which data is available), customer spending (gross gaming yield) in Britain’s casinos was 22% lower than in the year to March 2019 – a 43% reduction in real terms.

At the same time, casino operators are experiencing significant cost pressures. The sector employs around 11,000 skilled (and often personally licensed) people and so is particularly sensitive to wage inflation and this year’s rise in employer National Insurance Contributions (which together will impact the sector by between £25m and £30m a year). Additionally, with the Treasury’s convention of duty revalorisation in abeyance since 2022, operators continue to suffer real-terms increases in gaming duties.

In conclusion, I am at pains to stress, that any proposed increase in MGD in the Chancellor’s budget, would lead to the closure of a large number of casinos and the loss of thousands of skilled jobs, as well as risking planned UK-wide investment in the sector.

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