Rank Group, the owner of Mecca Bingo and Grosvenor Casinos, has warned that a proposed £460 million increase in gambling taxes could force the closure of its "much-loved" bingo halls and casinos. The warning comes as Prime Minister Andy Burnham considers tax proposals that would affect the gambling sector.
Tax Proposals Threaten Venues
Richard Harris, chief executive of Rank Group, said on Thursday: "Tax proposals from anti-gambling campaigners continue to cast clouds over a regulated industry that is proud to support jobs across the country [and] deliver great hospitality experiences to millions of customers."
The FTSE 250 company reported paying more than £225 million in taxes last year and cautioned the government against imposing further tax increases on the gambling sector. Before Andy Burnham's appointment as Prime Minister, a left-wing think tank had suggested he could generate £460 million by raising tax on slot and fruit machines from 20 to 40 per cent.
Impact on Business Viability
Any rise in Machine Games Duty (MGD) "will further impact venue viability across both Grosvenor and Mecca and will lead to a reduction in tax receipts within 12 months," Rank Group stated, as reported by City AM. While the government abolished a tax on physical bingo halls earlier this year, the prevalence of gaming machines at Mecca Bingo venues means the company could still suffer from such a tax rise.
Harris said higher gambling taxes would mean that "much-loved bingo halls and casinos will be forced to close, impacting customers in local communities." The group said it is focusing on efforts to drive revenue from its digital machines and electronic gaming at its Grosvenor Casino and Mecca Bingo sites.
Financial Performance and Strategic Moves
Rank Group recorded a five per cent rise in gaming revenue, to £835 million, in the year to June, though pre-tax profit fell by 15 per cent to £39 million. The firm said its statutory profit was impacted by a £7.5 million impairment charge relating to its gaming machines.
The business generated an average £7.6 million gaming revenue per week at its Grosvenor Casinos arm, a rise of five per cent, which operates around 50 venues across the UK. The group introduced 850 new machines across 37 of its casinos in an attempt to boost turnover, but noted that the Middle East conflict weighed on performance in its table gaming offering.
Portfolio Restructuring and Market Response
Rank has been scaling back its portfolio of Mecca bingo halls, responding to an "oversupply" of venues throughout the UK. The group has been left with "a much healthier estate of core clubs and flagship venues, well-placed to compete more effectively in their marketplaces," it said. Gaming machine revenue climbed by six per cent at Mecca, accounting for 42 per cent of the business's gaming turnover across the year.
Entain, the FTSE 100 owner of Ladbrokes, on Thursday criticised the government's "significant and disappointing" hike to taxes on remote gambling, which it said weighed on its underlying earnings. The Rank Group traces its origins back to media group The Rank Organisation, founded by Hull-born J Arthur Rank.
