The British Horseracing Authority is "strongly urging" government to consider the impact on horse racing of a potential rise in machine games duty to 40% after a betting industry analyst warned almost three-quarters of betting shops would be closed within three years and 28,000 people would be left jobless.
British racing would also stand to lose £92 million a year, or about a third of its revenue from betting, if MGD is doubled from its current standard rate of 20%, according to Regulus Partners.
Regulus forecasts about 1,500 betting shops would remain in Britain after three years at an MGD rate of 40%, and such cuts could happen sooner if "operators decided to get ahead of an inevitable curve."
Since last November's budget, 600 betting shops have closed or are in the process of closing, including 132 shops operated by Betfred.
If the predicted figure of approximately 4,050 further betting shops is forced to shut, MGD yields are forecast to fall by 32% to about £155 million, undermining its purpose as a tax-raising measure, according to Regulus. The budget is set to be announced by chancellor John Healey Oct. 28.
Greg Swift, director of communications and corporate affairs at the BHA, said: "The analysis provided today issues a stark warning to the government of the potential impact on British racing of further increasing taxes on betting in the budget.
"The Regulus Partners' report reveals that racing would lose £92 million a year—a third of its income from betting—if machine games duty were doubled to 40%.
"This would have devastating consequences for British racing, hitting prize money, Levy funding and our ability to continue investing in our world-leading equine welfare and veterinary research projects.
"We understand the chancellor will face some very difficult economic decisions in the budget. But far from raising tax revenues, as advocates of this policy proposal claim, the scale of betting shop closures forecast by this modeling means the Treasury risks putting thousands of people out of work while receiving almost a third less in taxation.
"We strongly urge the government to seriously consider the secondary impact on horse racing of a tax hike on betting shops, and also urgently explore measures to ensure that British racing—and the 85,000 jobs it supports—is put on a long-term and sustainable financial footing."
The betting industry analyst claims each shop closure costs British racing about £6,000 in Levy and roughly triple that figure in media rights contribution.
Figures supplied by the Betting & Gaming Council estimate that since last year's budget, 11,000 jobs in the gambling industry have already been lost.
Entain's U.K. public relations director Simon Clare believes an increase in MGD would be "a permanent blow" to horse racing and stressed the sport's income that would be lost from shop closures would be hard to replace.
Clare said: "This is a tax rise that risks doing lasting damage far beyond the Treasury's balance sheet. For British racing alone, it's a £100 million question.
"Every serious piece of analysis now points to the same conclusion: a huge increase in Machine Games Duty would force betting shops to close across Britain, cost thousands of jobs, and tear a significant hole in racing's finances."
