Holding two seemingly contradictory positions at the same time is not uncommon in business. But few examples in the UK gambling sector have illustrated this tension quite as clearly as the debate over gambling taxes throughout much of this year.
Following the April increase in Remote Gaming Duty (RGD) from 21% to 40%, attention has now turned to a potential doubling in Machine Gaming Duty (MGD) from 20% to 40% in this month’s Autumn Budget.
Cue the noise
And so, many industry stakeholders have once again embarked on a campaign to warn about a mass wave of shop closures and job losses.
Stella David, Chief Executive Officer of Ladbrokes and Coral owner Entain, became the latest to do the same in an op-ed in The Sun.
“At Entain, more than 2,500 colleagues are under 25,” she wrote. “Every year, we hire around 650 young people. For many, that first role becomes much more than just a job.”
“As the Chancellor considers further taxes on betting shops, those employment opportunities should be part of the calculation.
“When a shop closes it doesn’t just mean the loss of a business. It means the loss of jobs, training opportunities and career pathways for local people.
“You cannot demand businesses create opportunities for young people while simultaneously making it harder for them to stay open.”
Higher taxes lead to more financial strains, which leads to cost cutting strategies that are highly likely to impact the employee. The chain of logic here is solid. But David appears to adopt a rather different tone when addressing investors.
During an investor call earlier this year, Entain’s CEO sounded nowhere near as pessimistic when highlighting the market share that could become available as smaller operators struggle to absorb the tax increases.“If you look at the shape of the market, the bottom quarter of operators have around one percent share each,” she said.
“They are simply not equipped to ride the storm of these tax increases. We believe that creates an opportunity for operators with scale to gain meaningful share.”
Granted, the CEO of a publicly-listed company is unlikely to paint a negative picture of their own business in an investor call, but the contradiction is clear.
Within just a few months, Entain has highlighted the tax increases both as a threat when making its case to the government, and as a competitive opportunity when addressing investors.
Pulling the thread
A similar pattern is seen when comparing the position of trade body Betting and Gaming Council (BGC) with the comments made by some of the very companies it represents.
Grainne Hurst, CEO of the BGC, recently commented: “We are talking about thousands of hardworking people losing their livelihoods and venues that have served their communities for decades closing their doors for good.
“These are good jobs, offering young people a first step on the career ladder, flexible work and the chance to build a career. And it is towns and cities across the North, Scotland and the Midlands that will pay the heaviest price.”
Yet just two months earlier, now-former CEO of BGC member Flutter Entertainment Peter Jackson seemed more optimistic when discussing the company’s prospects in the post-tax hike landscape.
“Those long tail operators are going to be under a lot of pressure, both from a regulatory [standpoint] and from the tax increase.
“I think there’s an opportunity for us to use our scale as the market leader to better navigate these tax changes – we’ve got a very sustainable and clear plan to mitigate the tax changes.
“I think we will deliver those first order cost savings and we expect to see some significant growth and benefits come to us.”
Jackson reiterates Flutter optimism from UK tax rise as he nears departure
Similar comments were made by Robeson Reeves, CEO of another BGC member, Bally’s Intralot. Reeves said: “I think the large operators should see consolidation,” he added. “People with high enough margins should be able to continue what they do.”
Again, there is a difference between money-making and job-saving, but these major operators clarified later down the line from the initial announcements that they see these potential headwinds as opportunities to grow, rather than reasons to implement mitigation methods.
Taken together, the comments signal a lack of cohesion in the UK gambling industry’s campaign against further tax increases.
While the BGC warns of widespread job losses, some of its largest members are openly anticipating opportunities to strengthen their position in the online market as smaller competitors come under pressure.
Richard Bradley, lawyer at Poppleston Allen, made a similar point in his comments to SBC News.
“It is easy to say that the industry needs to provide solutions, but first there needs to be clarity around the concern, the evidence supporting it and the outcome policymakers are seeking,” Bradley said.
Ultimately, the issue is not that David, Jackson or Reeves are looking after their companies’ commercial interests. That is their job. Nor is it inherently contradictory for higher taxes to threaten smaller operators while creating opportunities for larger ones.
The problem is how these two realities are presented in the industry’s public argument. Its warnings about widespread harm become harder to evaluate when some of the companies making them are also identifying opportunities to emerge from the upheaval in a stronger position.
Lobbying should be coherent and made clear that it is in the interest of the industry as a whole, rather than a select few that see opportunities in a market with less competition.