Industry Warns Government to Modernise Land-Based Casino Rules Ahead of Increasing Costs

Industry Warns Government to Modernise Land-Based Casino Rules Ahead of Increasing Costs

In a British and Gaming Council (BGC) op-ed, David Williams, Director of Public Affairs at the Rank Group (Grosvenor Casinos and Mecca Bingo clubs), has appealed to the government to input the new land-based casino rules ahead of raising costs for the land-based industry to survive.

Upcoming changes to land-based operations

The April 2023 White Paper introduced several policies to modernise the UK land-based gambling sector, including allowing sports betting at UK casinos, introducing cashless payments, and changing gaming machine allocations. According to Williams, these changes must be implemented swiftly, allowing the UK sector to catch up with the global competition by becoming more modern and appealing to consumers.

Most importantly, the changes must come ahead of other upcoming measures, which are set to raise operational costs for the UK gambling business in 2024. These include the increase in the national minimum wage and the statutory levy. According to the op-ed, if land-based operators cannot raise revenue before the new and costly measures come into play, it could threaten the entire industry, affecting jobs and sustainability.

Raise in wages

In April 2024, national wages will go up 9.8%. While recognising staff’s contribution to the land-based gambling experience, Williams stated the increases would cost the rank group a substantial £10 million in wage uplifts.

“For land-based businesses like ours, people are, quite rightly, the biggest and most important cost line in our business. That is exactly how it should be, and our brilliant colleagues in our clubs are what make the difference and they are why our customers continue to keep coming back. Even so, the National Living Wage increase will come at a cost of almost £10 million to the Rank Group…on an annualised basis.”

“In context, our most recent full year results (to June 2023) saw the Group make a like for like trading EBIT of just £20.3 million and a statutory loss after balance sheet right downs and venue closure costs of £95.3m. When costs increase, we feel it harder than most.”

The statutory levy

The Gambling Review is also expected to implement a statutory levy against UK operators, which will be used to treat and research responsible gambling. Williams said this will increase the amount given per casino by 300% over the next three to four years.

Gaming duty bands frozen

The upcoming statutory levy and wage raise are set to compound the effects of the government’s Autumn Statement, which saw Jeremy Hunt freeze gaming duty bands rather than moving in line with inflation and industry expectations. According to estimations, this will result in a £5 million benefit in favour of the Exchequer and is effectively a £25 million tax increase for casinos over five years. It’s also called it a “stealth tax” by BGC head Michael Dugher, who explained that companies ready to “generate jobs and investment” can no longer.

The solution – the timing

Williams said the only way for the industry to mitigate these financial costs is by introducing the new positive measures stemming from the Gambling Reform Act.

“These improvements cannot come a moment too soon and it is precisely why the industry is urging the government to keep its foot to the floor in delivering their response to the land-based consultation, laying the necessary statutory instruments and getting the legislation delivered in the first half of 2024. It all takes time and, while timing is everything, we are not blessed with time on our side.”

“We are playing catch-up with casinos elsewhere in the world and much of the wider gambling ecosystem. Only when the legislation is delivered can we set about making our casinos more modern and appealing.”

The land-based gambling industry has only just recovered from COVID, according to the latest industry statistics from the UKGC, with figures returning to post-pandemic levels for the first time. Moreover, since 2005, one in four casinos has closed, leaving only 117 across the country, meaning the industry is already vulnerable to economic shocks and unprepared to weather substantial changes.

Overall, the government must get the timing right and support the industry by fully considering the implementation schedule for the new gambling policies in 2024 – if survival is to be the priority.

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