'Devastating consequences for British racing' - BHA sounds alarm as tax rise threatens 28,000 jobs and a third of betting income

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The BHA is "strongly urging" government to consider the impact on horseracing of a potential rise in machine games duty (MGD) to 40 per cent after a betting industry analyst warned almost three-quarters of betting shops would be closed within three years and 28,000 people would be left jobless. 

British racing would also stand to lose £92 million a year, or about a third of its revenue from betting, if MGD is doubled from its current standard rate of 20 per cent according to Regulus Partners.

Regulus forecasts about 1,500 betting shops would remain in Britain after three years at an MGD rate of 40 per cent, and such cuts could happen sooner if “operators decided to get ahead of an inevitable curve”.

Since last November's budget, 600 betting shops have closed or are in the process of closing, including 132 shops operated by Betfred.

If the predicted figure of approximately 4,050 further betting shops are forced to shut, MGD yields are forecast to fall by 32 per cent to about £155 million, undermining its purpose as a tax-raising measure according to Regulus. The budget is set to be announced by chancellor John Healey on October 28.

Greg Swift, director of communications and corporate affairs at the BHA, said: “The analysis provided today issues a stark warning to the government of the potential impact on British racing of further increasing taxes on betting in the budget.

“The Regulus Partners’ report reveals that racing would lose £92 million a year – a third of its income from betting – if machine games duty were doubled to 40 per cent.

“This would have devastating consequences for British racing, hitting prize-money, Levy funding and our ability to continue investing in our world-leading equine welfare and veterinary research projects.

“We understand the chancellor will face some very difficult economic decisions in the budget. But far from raising tax revenues, as advocates of this policy proposal claim, the scale of betting shop closures forecast by this modelling means the Treasury risks putting thousands of people out of work while receiving almost a third less in taxation.

“We strongly urge the government to seriously consider the secondary impact on horseracing of a tax hike on betting shops, and also urgently explore measures to ensure that British racing – and the 85,000 jobs it supports – is put on a long-term and sustainable financial footing."

The betting industry analyst claims each shop closure costs British racing about £6,000 in Levy and roughly triple that figure in media rights contribution.

Figures supplied by the Betting & Gaming Council (BGC) estimate that since last year’s budget, 11,000 jobs in the gambling industry have already been lost.

Greg Swift: "This would have devastating consequences for British racing"

A blog on the subject by Regulus read: “Betting shops would be one of the biggest victims of an MGD increase, along with the tax receipts themselves, high street employment, and British racing.

“The reason for this is very simple: betting shop operators keep far less in profit than the government already collects in taxes, while most of the costs necessary to keep shops open are fixed, the biggest of which is staff.

“The problem with increasing MGD from 20 per cent to 40 per cent is that it adds about £45,000 to the cost of an average shop – or all its free cash flow. There is no point in running a shop for nothing.”

John Healey: chancellor's budget could have a huge impact on the future of British racingCredit: AFP via Getty Images

Entain's UK PR director Simon Clare believes such an increase in MGD would be "a permanent blow" to horseracing and stressed the sport's income that would be lost from shop closures would be hard to replace.

Clare said: “This is a tax rise that risks doing lasting damage far beyond the Treasury’s balance sheet. For British racing alone, it's a £100 million question.

"Every serious piece of analysis now points to the same conclusion: a huge increase in Machine Games Duty would force betting shops to close across Britain, cost thousands of jobs and tear a significant hole in racing’s finances.

“Behind those numbers are thousands of ordinary hard-working people whose jobs would be put at risk. One in five betting shop workers are young people taking their first steps on the career ladder or supporting themselves through their studies, while many others depend on the flexibility of shop work to balance jobs with childcare and other family responsibilities.

“For racing, this is far more than a betting-shop issue. Betting shops remain one of the sport’s biggest funding partners through media rights and the Levy. If thousands disappear, so do tens of millions of pounds that racecourses, owners, trainers, stable staff and rural communities rely on.

“Once that income is gone, it doesn't simply come back. You can't rebuild a betting shop network and you can't easily replace a major source of racing funding. This would be a permanent blow to the sport, delivered in pursuit of a tax rise that the evidence suggests will not raise any extra tax at all.”

The BGC this week launched a ‘Back Our Betting Shops’ campaign in a bid to highlight the impact that further tax rises would have on the industry.

Read more . . .

William Hill retail boss warns tax rise could be 'catastrophic' for betting shops - and have 'huge' impact for racing 

'We will have to walk away' - Betfred boss warns firm will ditch sponsorship of British Classics if taxes rise in the budget 

Thousands of job losses, hundreds of closed shops and millions lost in racing funding: the cost of last year's tax rises 

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