Could the UK Double Machine Game Duty? | Ep. 874

Charlie Horner (00:01.989)
His Majesty's Revenue and Customs, the UK's tax authority, has published its latest set of statistics outlining the tax receipts it took from betting and gaming in the UK between April and July. It's the first glimpse that we've got from the government about how the doubling of remote gaming duty in April has impacted the tax intake, and it comes at a pivotal moment for the retail sector, which is waiting anxiously to see whether John Healy raises Machines Game Duty in his budget at the end of the month.

So is it a case of should 40% appear too small, be thankful I don't take it all? Welcome back to iGaming Daily, supported by Optimove, the creator of positionless marketing and the number one player engagement solution for sports betting and iGaming operators. I'm Charlie Horner and I'm joined today by SBC News editor Ted Orm Clay and our media director Martin Elliott. Ted, how's things?

Ted Orme-Claye (00:58.926)
I'm alright thank you Charlie. Relatively caught up on rest and so on after Lisbon. But yeah, know that's still a work in progress. Yeah and we've come back to obviously quite a lot to talk about. We've got this tax, there's still the Brazil stuff ongoing. The elections are obviously going on over there. Some update on Finland tax. Everything, everything and everything.

A busy week back from Lisbon.

Charlie Horner (01:30.747)
Absolutely. And Martin, it just goes to show that the the news agenda doesn't slow down for anyone, even when we do need some well earned rest.

Martyn (01:39.12)
Yes, it was something of a disappointment to arrive back from Lisbon and then find this morning the first thing I was going to do was open a spreadsheet full of tax data. yeah, fun times.

Charlie Horner (01:53.317)
Yeah. How the how the mighty fall, I think, is is the phrase that comes to mind there. okay. Let let's dive into it because we have been you know, searching through spreadsheets all all morning. Ted, how about you give us the the overview of the key findings for from HMRC's drop of data? What what are the main takeaways for for listeners?

Ted Orme-Claye (02:16.942)
They've been making a lot of money through our gaming tax I think and then we can I think we can safely leave it at that No, so obviously as our listeners know Quite extensively remote gaming duty went up to 40 % in April. I think the the most notable The most notable takeaway for me from this is that

As you'd expect, the tax intake by the government has gone up according to the provisional figures from April to July. I wrote about this this morning and I feel like this is a bit of a blow to some of the industry campaigning.

Given that you know one of the big talking points has always been that actually by increasing taxes you can actually you will it will lead to the the rates going down due to operator revenue getting hit and stuff with mitigation measures and so on. For some of the politicians who are in favor of increasing taxes further these initial figures might give them a bit of a boost.

We've also seen that kind of a continuation of a long run trend, we've seen the pool betting duty has gone down quite considerably over the past couple of years. I mean, that's in line, I think, with gambling commission stats. You know, the regular GGY updates we get from the gambling commission will show that that's been dropping off quite a lot of participation in pool betting is dropping off. It's becoming increasingly relegated.

is one of the smaller aspects of the industry. And then the more topical one, I guess, is machine games duty has remained pretty broad. But, you know, looking at the graphs and the stats on that, it's remained quite consistent over the years and also quite considerable. So it might be quite a tantalizing prospect for the government to try and get some more income out of that by...

Ted Orme-Claye (04:27.022)
by doubling the rates, which as you said, Charlie, they are reportedly considering with the budget coming up.

Charlie Horner (04:33.89)
Martin, what was what was your reaction to to seeing some of the figures that HMRC have put out and do you subscribe to the idea that that Ted alluded to that maybe this is a bit of a win for the proponents of of tax rises?

Martyn (04:48.878)
Well, it's very early to be saying that. If you break down the figures a little bit, you'll see that total sort of tax returns for betting and gaming were just three million pounds higher in the quarter in 2026 than there had been the previous year.

But, well, how should we put this? The remote gaming duty, which had the huge tax increase from 22 % to 40%, so an almost doubling, that went up by 67 million pounds in the quarter. So that was carrying the sector, carrying the returns. So it might be a case that

while that particular revenue from that particular tax is going up, there are costs being taken out all over the place in the general businesses, not related directly to the online casino segment. So it may be that the total tax take won't go up from the industry, but that'll be because revenue from shops is going down.

revenue from sports betting is going down, we're seeing bit less investment in those areas and shop closures and things.

But yeah, I guess if you are one of the people who's been campaigning for slots, higher slots taxes, you'll look at this and go, yeah, happy days, told you.

Charlie Horner (06:32.076)
It's yeah, it is r right that it's quite complicated to to draw huge conclusions from from what is essentially one one quarter of of data, that's that's for sure. but but Ted I mentioned it earlier, machines gaming duty is is the is the topic de jure, particularly this month given given that the budget is just around the corner. how much tax did the exchequer take from from machines during that period and

What what lessons do you think we can learn from the trends if the government were to consider, I mean, doubling it again in in some cases?

Ted Orme-Claye (07:10.614)
Well, sorry, let me just find the data I've got in front of me. during for that provisional, for the provisional period, April to June, you had intake of 162 million. That's 5 % higher than the previous year. I think it's also a little bit, according to the graphs, more than the previous quarter as well. But like I said earlier, machine games usually seems to be very stable.

over lots of the quarters, it doesn't fluctuate massively. Which I guess is just a reflection of the product. It's in the betting shops and they're open from a certain period of time. They'll have peak hours when people are on a lunch break, when they're coming back from work on a weekend or so. the more static nature of that, I guess it makes sense that the intake is broadly the same month by month.

Obviously the big talking point right now in machine games duty is that betting shops do count on them quite significantly as a revenue source. We're seeing a lot of conversations right now about the impact that increasing the rates on them would have on betting shops. We talked about this before with Betfred planning to close a number of venues.

Jennings Betts founder and CEO, Greg Knight, has become the latest industry leadership figure to speak to the media about this and talk about how significant an impact it would have on Jennings Betts retail estate and the employability around that. I think a big problem the industry is going to have with the conversation around machine games duty is that bank...

People who have an interest in betting shops, say businesses, sorry, have interest in betting shops, been trying quite hard, understandably, to distance themselves from the adult gaming centers, which are much more controversial. And I think it's safe to say a lot more widely disliked by both politicians and the general public, have a much more difficult image with a lot of people. And...

Ted Orme-Claye (09:20.206)
Ultimately, these machine games are in both the betting shops and the adult gaming centers. So it's going to be a difficult task for the industry to balance those different narratives, I think.

especially the narrative that we've had quite a lot about the betting shops rolling in the community and a source of community engagement and so on. People gathering around talking about the sports and the racing, chatting with the staff. It's a lot harder to make that argument around machine games duty. And on top of that, like we've seen with these statistics, clearly revenue through them is very stable. I think the government at this time, when it's got a lot of financial pressures on it, a lot of big spending plans, they're going to be looking at that.

and thinking we can squeeze a bit more out of this. I know in the grand scheme of things, the amount of money they'd get from it is a drop in the ocean in comparison to the spending the government has to account for. But they might just be thinking every little helps. Every drop in the ocean is still a useful drop.

Charlie Horner (10:22.242)
Yeah, absolutely. look Martin, I just wanted to take politics out of it just just for a moment. We'll we'll return to it af after the break. Don't worry, you'll you'll get your you will get your opportunity to to opine, I'm sure. but j just before we go to a break, what what do you think this data tells us in terms of giving us a snapshot about consumer participation and and operator profitability within the UK market over this this this period?

Ted Orme-Claye (10:31.448)
Ha ha ha.

Martyn (10:32.016)
Okay.

Martyn (10:52.08)
Well, think what it says is that demand for betting gaming is roughly flat. There's a significant chunk of the population enjoying having a punt. But despite the campaigners who are telling us that all gambling advertising is sending us to hell and everyone's going to suffer because of it, you know, it's...

it just looks fairly flat. People who enjoy it are doing it, people who don't are staying away from it, as you would expect. what the figures are showing is that, because they've also given us a, we've got the provisional figures for April to June for the full quarter there, but they've also got some July data in, which is quite frightening, I would think, for the operators as well.

So I think we're seeing that on a fairly steady user base, they'll just be making significantly less profit at the end of the day.

Charlie Horner (12:02.488)
Which is it which which of course means that you then have to attract more players. which I guess it means more marketing, which means more more con more criticism from from those people who who are opposed to to seeing gambling advertising in in the media. and I guess that that that flat line that you talk about, Martin, is very indicative of the UK being a a very mature market.

Martyn (12:08.494)
Mm-hmm.

Charlie Horner (12:31.576)
I think most people have been exposed to to gambling in some way or form and have probably made their mind up of whether they want to participate in it or not. but but interesting neither nevertheless. but Martin, Ted will take a very short break and then we'll we'll get back into the politics of this and and and see what if whether this data might have an impact on John Healy's decision making later this month.

Charlie Horner (12:58.338)
Welcome back to iGaming Daily. I I mentioned it just before the break, but th the budget is just a few weeks away now. And though though we're not I d I don't think there's a as much of a panic as there was perhaps this time last year when remote gaming duty was was set to be doubled. There is a lot of concern around machine games duty, which is definitely being looked at by John Healy, though we don't know for certain.

Martin, is is there anything in this data that indicates that hiking machines gating duty might not be such a good idea?

Martyn (13:36.113)
I think if you are John Healey who recently said that he regularly gets overnight emails from Gordon Brown, obviously the former Prime Minister and long-term Chancellor of the Exchequer as well, on all sorts of issues and we know that this is a Gordon Brown favourite policy, I would say there's nothing in there that's going to put John Healey off. But also he should be looking at and going, I could double this.

bring in maybe 800 million in the first year.

That is nothing, literally nothing in government terms. are, I think I'm right, saying we're three trillion pounds in debt. So bringing in extra 800 million is neither here nor there. So if he's got a bit of common sense, he'll be trying to work out what the losses from this would be. If you push 25 % of betting shops out of business, and that's the kind of figures we're getting from the operators now,

What's the cost in that in terms of loss of jobs, loss of corporation tax from profits on those betting shops, benefits you have to pay out to the people who are no longer in work, sorry, business rates going into local government from having those empty premises and so on. So it's difficult to where they'll actually make significant money from.

from hiking this duty. And it's certainly not going to pay for social care. It's not going to, I mean, it's barely going to pay for the subsidised bus fares that the government is so keen to promote at the moment. It just seems a bit like gesture politics to me.

Charlie Horner (15:32.268)
Mm. Ted, what's your read on this one? Do you do you think there's a it's there's a an air of e inevitability about this or do you have a different take?

Ted Orme-Claye (15:42.799)
I'm personally expecting the increase to go ahead. Maybe not a full doubling, but I'm expecting them to do something just because of the amount of discourse has been around it. As we've discussed on the podcast before, the sentiment that the current administration kind of clearly has around the industry. I don't think they're too overly sympathetic to a lot of the industry's arguments.

know, Joe, my gaming expert mentioned this on, I think one of the last podcasts we did before, Lisbon Charter, you know, about the panel that was on at the Labour Party Conference, where there was pretty, yeah, I'd say fairly stacked in favour of voices against the industry. Martin, I think has raised a very good point that if, you know, any...

any chancellor, any politician making big financial decisions like this, what should be taking a look at the wider picture and whether actually increasing this particular rate could impact, could have a knock on effect on other rates, like mindset of the profit taxes and then loss of jobs, loss of income there, other potential government spend that could arise. But I do think that given the current government's general attitude towards the industry, I wouldn't be surprised if they

just think let's just go ahead with it and see what we can get out of this and we'll address the consequences later. Yeah, I'm being a bit more cynical. I'm being quite cynical about this.

Charlie Horner (17:19.403)
Well with good reason.

Martyn (17:19.408)
Can I just add in the interest of balance there? They did have that fringe meeting which was absolutely stacked in one direction at the Labour Party conference but the gambling minister I believe also did a casino tour with I think it was hosted by Rank Group and so on so she did take a little bit of time to listen to some influence from

industry side of the fence as well.

Whether that will make any difference, I've no idea. Yeah.

Ted Orme-Claye (17:52.556)
No, that yeah, so I should.

Yeah, I should add that, know, in her role as Gambler Minister, I it does look like Vicky Foxcroft has been continuing what Baroness Twycroft was doing and doing her job well in that respect of engaging with the industry. Yeah, we should add that. Yeah, apologies.

Martyn (18:07.674)
Yeah.

Martyn (18:13.998)
Yeah, in between being quite cynical about the government.

Charlie Horner (18:14.5)
Well, i if if we are to listen to the industry.

Ted Orme-Claye (18:20.908)
Ha ha ha ha.

Martyn (18:21.046)
Yeah.

Charlie Horner (18:22.796)
Indeed. Well, if if we do engage with the industry and and listen to that, you know, Jennings Bet for for instance is is one in that maybe one hundred of its shops might be rendered commercially unviable if if machines game duty is to is to is to rise in the in the way that has has been mooted. And Genting Casino has closed its property in in Coventry as well because that is has been deemed no longer commercially viable.

I is government considering those closures and its decision making? I are they engaging properly with the industry to to hear both sides of this really complex debate?

Ted Orme-Claye (19:05.208)
Well, like Martin has pointed out, Vicky Foxcroft has been going on tours of the casinos and so on and looking at the, and will have seen the employment there. It's just, I guess again, this does come down to kind of who's more influential in government, I guess. We can relate this back to the decision-making last year ahead of the November budget where DCMS was clearly a lot more skeptical about.

about prospective increases in gambling tax that was noted I believe in was in the the OKR report into yeah excuse me

OBR, or Office of Budgetary Responsibility, their report into the budget, they noted some of the concerns DCMS had raised. So it wouldn't surprise me to all of Vicky Foxcraft, after her engagement with the industry, does just give some feedback to the government ahead of the budget. But we saw that happen last year, and ultimately the side that prevailed was the side that wants to put the taxes up. it does depend a little bit on which...

which departments are vying for influence or being listened to within the government itself, I think. That's one of my opinions there.

Charlie Horner (20:24.494)
Martin Miguel has come in there.

Martyn (20:29.528)
I think DCMS has got very little influence over Treasury decisions. I think it's as simple as that. John Healey has got an extremely difficult job, one which he made more difficult himself in the manner that he resigned as defence secretary before the change in prime minister. He's got to make the sums add up somewhere and we know from former chancellors that

Actually, the Treasury is full of people who are very good in theory. They're all spreadsheet wizards. They can come up with these proposals and tell you what it's going to cost, what it's going to raise, all this kind of thing. But they lack bit of outside of the Treasury real world experience when they're making these decisions. So whether that means they can't see three, four steps down the line or whether they just can't see political impact.

from what seems on the spreadsheets to look like a great plan. Yeah, we do get bad decisions, we do get counterproductive decisions. If you look back in budgets for, well, certainly throughout my lifetime, it's happened fairly regularly. I would think that the view of the gambling minister

is a very, very small consideration for John Healy as he slaves late in the night putting his red box together for the big day.

Ted Orme-Claye (22:08.842)
Yeah, and I think that's kind of exactly what happened last year as well, really, wasn't it? More or less.

Martyn (22:19.706)
their dynamic modeling of what the impact would be, what the behavioral changes from the tax, tax rise would be, wasn't as good as it should have been. And I don't see any reason to believe it would be better this time around.

Charlie Horner (22:38.586)
Well, the Treasury imposing its opinion right across Whitehall. Colour me shocked. right, we'll I'm sure we'll come back to this story and and and the budget in the lead up to it. But I just wanted to end on a slightly different story, but but one that is certainly related to the conversation that we've had today, because there's there's been an interesting court rule in in in the UK in the last week or so that impacts the way that remote gaming duty is is

Martyn (22:44.869)
Yeah.

Charlie Horner (23:07.514)
Collected and and is is imposed. Ted, you've been writing about this one on SBC News. Do you want to just tell us about what's been happening with Jumpman Game?

Ted Orme-Claye (23:17.166)
Sure, so Jumpman were given a, they got an invoice, I guess, from HMRC, as we're all familiar with, at one point or another, I'm sure, between looking at...

their activity between 2018 and 2022 they were billed 13.2 million and after having a look at that they challenged it because of the inclusion I believe of some some bonus games within that free spins games basically and the re-wagering of

money won by some customers in free spins and the whole so they took that to the the first tier tribunal who sided with HMRC they then decided to keep fighting it and took it up to the

I've forgotten the name, but the upper tribunal who have done something quite rare, from what I understand, from my limited understanding of British law. think I'm going to, shall I drop out one of our favourite catchphrases, which is we are not lawyers on this podcast. But yeah, the upper tribunal has reversed some of the first tier tribunal's decisions around this, specifically the way

certain finance acts, I believe it was the Finance Act of 2014 and the Finance Act of 2017 which are the ones that set up our current understanding of remote gaming duty and other duties played on gambling and specifically about the interpretation of how re-waged

Ted Orme-Claye (24:58.062)
funds from free spins are taxed and they've actually done something also that is I think quite unprecedented which is that they've they've reduced that specific tax bill from 13.2 million to nil as a result of what they saw as an error in the interpretation of the law. So yeah it's quite an interesting case just because of some of the first like some of the kind of first time occurrences that happen within this and like other legal cases

involving UK gambling, I think it'll be significant going forward just for the reason that it's going to set a precedent around getting interpretation of gaming tax law by operators, by the tax authorities and by legal authorities going forward. I hope that made sense.

Charlie Horner (25:47.448)
Yeah, absol absolutely did. I I think this is an interesting case in the sense sorry, Gold Martin, go ahead.

Martyn (25:47.652)
Yeah, I think they, yeah.

Martyn (25:54.308)
I was just going to say you did, yeah, I think you've explained it pretty clearly there, Ted. One thing to point out is that this referred to spins, for example, bonuses you won from a free to play game to start with. So no money has changed hands at any point in this transaction, rather than it being bonuses and so on, I believe were...

Ted Orme-Claye (26:11.756)
Yes, sorry, yes.

Martyn (26:20.752)
already had a different arrangement in place prior to this ruling already. is it...

Ted Orme-Claye (26:26.41)
Yeah, no, you yeah, sorry, you are correct is to do with promotional free offers. Yeah

Martyn (26:31.384)
Yeah, it is good news. It is good news for these sort of free to play any operators running these free to play games as a sort of promotional tool and so on in there. And there's also the prospect that you might be able to get up to four years, four years of this tax bill back.

Charlie Horner (26:55.866)
It's not to be sniffed at in these these economic times. I'm sure the operators will be intrigued by this development and will be pursuing all avenues. Okay, well look, that's let's leave that there for today on that mysterious note. Martin, Ted, thanks ever so much for joining me today and explaining what what are complicated tax stories. Really appreciate your time. Thanks to Optimu for supporting the show as always.

And to our listeners, thanks for tuning in to today's episode of iGaming Daily and come back tomorrow to keep up to date with all the latest global gambling news.