British Racing's Finances to Incur 'Significant Damage'

British racing's finances will incur "significant damage" in the aftermath of chancellor of the exchequer John Healey's decision to raise machine games duty in the Oct. 28 budget, the British Horseracing Authority has warned. The increase from 20% to 25% was not as great as was feared, but could still result in hundreds and possibly thousands of betting shops closing. As a result, estimates of the impact for the sport from lost levy and media rights payments ranged from £15 million, according to work done by "Big Four" accountancy firm EY for the Betting and Gaming Council, to as much as £57 million in four years' time, according to industry analysts Regulus Partners' modeling—a figure cited by BHA chief executive Brant Dunshea. Campaigners had originally called for the government to double the rate of MGD, which is levied on the gaming machines found in betting shops and other venues, to 40%. Dunshea acknowledged that the government had "rejected a worst-case scenario," but added: "In raising the rate to 25%, it will nevertheless cause significant damage to racing's finances. "There is now a clear risk that this decision will lead to the closure of hundreds, if not thousands, of betting shops across the country." Dunshea said British racing derives nearly a third of its £350 million annual income from betting via high street shops and that the potential for a £57 million hit had been shared with the treasury before the budget. He added: "While the MGD rate increase is not as severe as some called for, this change could still prove devastating for the future of our sport—impacting prize money, the viability of racecourses, thousands of jobs; and vital horse welfare projects and research. "Betting shop closures will also significantly impact a large part of the sport's fanbase for whom a visit to their local bookie is the primary way they engage with horse racing." Dunshea said the BHA would seek to "urgently engage" with the government to establish how to reduce the impact of the decision. Arena Racing Company chief executive Martin Cruddace also expressed disappointment at the tax rise, although he acknowledged it could have been worse. Cruddace said: "We hope that, at the very least, today's announcement from the chancellor will give some certainty to the sector for a number of years to come." In the budget, Healey announced measures to take 70,000 businesses out of paying business rates but added: "To pay for this support for our high streets, I'm raising taxes on gambling by increasing machine games duty from 20% to 25% for higher stakes machines whilst protecting pubs and seaside arcades." However, betting industry figures warned there would be consequences for betting shop closures, jobs, and racing. One industry source said: "It's a jobs killer. It's ideology on steroids and it's staggering to see the same campaigners who cozied up to racing last year now trying to defend themselves over a tax rise that will cause huge damage to a sport they took advantage of. "These know-it-alls will now switch from tax to demanding a gambling ad ban—how does that help racing?" Ladbrokes and Coral owner Entain said the tax rise would add £25 million to its costs and, while that could be mitigated, one of those mitigations would be "estate rationalization." Chief executive Stella David said the gambling tax increases announced in last year's budget had already had detrimental consequences for "employees, communities as well as customers," adding: "These additional tax changes will further compound that damage and push more people into the growing illegal market."