Deutsche Bank Warns MGD Rise Could Hit Rank Group Hardest
United Kingdom.- 24 September 2026 | www.zonadeazar.com Deutsche Bank has warned that Rank Group could be one of the operators most heavily affected if the UK government doubles Machine Games Duty, MGD, from 20% to 40%.
The bank estimates that Rank could face around £35 million in additional annual costs after mitigation.
40% Scenario
The analysis models a potential increase in MGD to 40%.
The measure has not yet been approved and remains under discussion ahead of the Autumn Budget.
Rank Seen as Most Exposed
Deutsche Bank identified Rank Group as the listed operator with the greatest relative exposure.
Its extensive retail footprint and reliance on gaming-machine revenue are the main reasons.
£35 Million Additional Cost
After mitigation measures, Deutsche Bank estimates an annual cost increase of approximately £35 million.
That would place considerable pressure on the group’s profitability.
44% of 2028 EBIT
The estimated impact would represent roughly 44% of Rank’s forecast 2028 EBIT.
It would also equal approximately 17% of EBITDA in the nearer term.
Pre-Mitigation Impact
Before mitigation, Deutsche Bank estimates that doubling MGD could create costs equivalent to around 24% of EBITDA.
Mitigation Strategy
The bank believes land-based operators will have less ability to offset the increase than online businesses.
Potential responses include:
- Closing loss-making venues.
- Reducing operating costs.
- Staff adjustments.
- Optimising opening hours.
- Reviewing capital expenditure.
- Improving machine efficiency.
Around 30% Mitigation
Deutsche Bank uses a baseline assumption that physical operators may be able to mitigate roughly 30% of the gross tax increase.
Venue closures are expected to be the primary mechanism.
Retail Fixed Costs
Physical businesses face a relatively rigid cost base.
Major expenses include:
- Rent.
- Staffing.
- Energy.
- Security.
- Maintenance.
- Equipment.
This limits their ability to absorb major tax changes quickly.
Online Has Greater Flexibility
Digital operators can respond more easily through changes to:
- Promotions.
- Free bets.
- Marketing.
- Supplier terms.
- Workforce structure.
Such measures are less effective for physical gaming venues.
Importance of Gaming Machines
Rank derives a meaningful proportion of its land-based earnings from gaming machines.
A duty increase specifically targeting machines would therefore directly affect a key part of its strategy.
Grosvenor Casinos
Grosvenor Casinos is one of Rank’s principal businesses.
Its estate depends on revenue from both table gaming and electronic gaming machines.
Mecca Bingo
Mecca Bingo would also be affected.
Gaming machines provide an important supplementary revenue stream for bingo clubs.
£100 Million Profit Ambition
Rank continues to target at least £100 million in underlying operating profit over the medium term.
A major increase in MGD could make that target harder to achieve.
Machine-Led Growth
Part of Rank’s growth strategy is based on increasing machine deployment and productivity.
A doubling of the tax rate would directly challenge that plan.
FY2025/26 Results
Rank reported improved revenue and profit for its 2025/26 financial year.
Group like-for-like NGR reached £834.1 million, up 6%.
Operating Profit
Underlying operating profit increased to £78.6 million, compared with £64.8 million in the prior year.
That represented growth of approximately 21%.
Venue Performance
Land-based businesses generated £585.6 million in like-for-like NGR.
Revenue increased by around 5%.
Digital Growth
Digital like-for-like NGR reached £248.5 million.
That represented growth of around 8%.
Grosvenor Machine Growth
During the first six weeks of the new financial year, Grosvenor gaming-machine revenue increased by approximately 15%.
The result highlights the strategic importance of the segment.
Rank Warning
Rank has already warned publicly that a major increase in MGD could make some locations commercially unviable.
Venues with tighter margins would face the greatest pressure.
Potential Closures
The company says higher taxation could lead to closures of casinos and bingo clubs.
Potential consequences include:
- Job losses.
- Lower local tax contributions.
- Reduced high-street activity.
- Community impact.
Employment Exposure
Employment is a central concern for land-based operators.
Physical venues require significant permanent staffing compared with predominantly digital models.
Tax Contribution
Rank paid approximately £225.9 million in taxes and duties during 2025/26.
Around £198.9 million of that was paid in the UK.
Potential Lower Tax Receipts
Rank argues that excessive taxation could ultimately reduce government revenue if venues close.
This remains the company’s position rather than an official government conclusion.
Deutsche Bank Maintains Hold
Deutsche Bank has maintained its “hold” rating on Rank.
It had previously downgraded the company from “buy” in January 2026.
Entain Also Exposed
The analysis also compares Rank with Entain and Flutter.
Deutsche Bank estimates Entain could face approximately £100 million in additional annual costs before mitigation.
Flutter Less Exposed
Flutter is expected to face a considerably smaller impact.
The bank estimates additional UK retail duty costs of less than $20 million, representing under 1% of group EBITDA.
Land-Based Operators Face Greater Risk
Deutsche Bank’s central conclusion is that businesses with large physical estates will be disproportionately affected.
This places Rank among the operators with the highest financial exposure.
Industry Context
The UK gambling sector is already facing increased taxation.
Remote Gaming Duty rose from 21% to 40% during 2026.
The policy debate has now shifted towards gaming-machine taxation.
High-Street Pressure
Betfred and other operators have already closed retail locations during 2026.
The industry argues that further tax rises could accelerate the contraction of Britain’s physical betting and gaming estate.
Next Steps and Impact
The final decision will depend on measures announced in the UK’s Autumn Budget.
If MGD rises materially, Rank is likely to accelerate efficiency initiatives and review the profitability of parts of its venue portfolio.
For now, Deutsche Bank’s analysis positions Rank as one of the operators most financially exposed to a tougher tax regime for gaming machines.
Editó: @fonta
