Shares in Entain PLC (LSE:ENT) and Rank Group PLC (LSE:RNK) dropped sharply after a report suggested gambling machine operators could face a massive tax increase.
The report, published by the Guardian, outlined a proposal from the Social Market Foundation to double machine games duty from 20% to 40% on higher-stakes Category B machines.
Category B machines allow £2 spins every 2.5 seconds and are found across casinos, bookmakers, and adult gaming centres throughout the UK.
The thinktank estimated the measure could raise between £275 million and £458 million annually, on top of the roughly £600 million the sector already contributes in tax.
The proposal is linked to Andy Burnham, the Greater Manchester mayor and possible future Labour leadership contender, who has previously spoken out against gambling venues in vulnerable communities.
Burnham has criticised adult gaming centres for “targeting some of the most vulnerable in our communities” and has backed calls for tougher local licensing powers over such venues.
Adult gaming centres, sometimes called “slot sheds”, have expanded rapidly on UK high streets in recent years, particularly in areas considered more economically deprived.
The Guardian noted that current Chancellor Rachel Reeves may have previously avoided raising the duty partly due to concerns over the horse racing industry’s dependence on betting shop revenues.
Industry groups pushed back hard against the proposal, with Bacta calling the report “fantasy economics and grossly irresponsible” and warning that a 40% rate would destroy jobs and push customers toward illegal gambling markets.
The Betting and Gaming Council also warned that any duty increase would put significant numbers of jobs at risk across the sector.
Entain, the owner of Ladbrokes and Coral, was among the hardest hit, falling 2% to 579.8p, while casino and bingo operator Rank slipped 2.1% to 101p.
Flutter Entertainment PLC (LSE:FLTR, NYSE:FLUT) was largely unaffected, edging down just 0.2% to 7,782p, as the wider sector absorbed the news with mixed reactions.
William Hill owner Evoke PLC (LSE:EVOK) bucked the trend entirely, rising 0.3% to 47.2p as investors appeared less concerned about its exposure to the proposed changes.
