Rank Group, the owner of Grosvenor casino, has reduced its workforce as part of a cost-cutting drive to mitigate the financial impact of Chancellor Rachel Reeves' decision to raise the Remote Gaming Duty (RGD) rate from 21 per cent to 40 per cent in last autumn's Budget. The tax increase took effect in April, forcing the company to scramble to absorb the blow and safeguard revenue.
The Maidenhead-headquartered firm implemented headcount reductions alongside cuts to marketing expenditure and supplier costs to offset spending and counter the effects of the higher levy. However, it chose to preserve targeted digital advertising and customer incentives, such as bonuses and loyalty rewards, to retain players on its digital gambling platforms.
Chief Executive Acknowledges Cost and Taxation Headwinds
Chief executive Richard Harris, who was confirmed as the permanent head of the casino group earlier this week, acknowledged that the tax increase had triggered significant cost and taxation headwinds, according to City AM. Despite the challenges, shares rose 8.3 per cent in early trading to 102.3p, with the stock up 5.2 per cent since January.
Regulatory Settlement Proposal to Gambling Commission
Rank Group also confirmed that it had submitted a regulatory settlement proposal to the Gambling Commission to avoid a financial penalty. The FTSE 250 firm offered to pay the watchdog £5 million following an investigation into the Grosvenor casino licence that uncovered evidence of rule breaches. The regulator confirmed it was minded to accept the settlement proposal and is awaiting formal documentation to proceed. The payment is expected to be recorded as a separately disclosed item to avoid distorting reported profits.
Digital and Venue Performance
The decision to retain targeted advertisements drove like-for-like digital net gaming revenue (NGR) up 12 per cent in the final quarter to £63.9 million. Grosvenor venues posted a three per cent increase in NGR to £98.3 million, despite disruption to international travel triggered by the conflict in the Middle East, underpinned by strong gaming machine performance. Mecca Bingo halls saw NGR reach £35.4 million, while its Enracha venues reported NGR of £11.3 million.
