Paddy Power Co-Founder Calls Betfred's Machine Duty Warnings "Scaremongering"

Replying to Fred Done's forecast of 495 Betfred closures, Kenny told the Financial Times he used "the same script" himself when he represented bookmakers. He wants machines and online slots taxed harder than bets on sport.

• Stewart Kenny, co-founder and former chief executive of Paddy Power, has dismissed warnings about a rise in Machine Games Duty as "familiar scaremongering" in a letter to the Financial Times, according to Focus Gaming News
• He was responding to Betfred founder Fred Done, who has said that doubling the duty would close 495 Betfred shops and that "by 2030 we will have no betting shops"
• "When I represented bookmakers, I used the same script whenever tax was about to rise," Kenny wrote, adding that the devastation predicted before the curbs on betting terminals "did not follow"
• He called for "intelligent, not blanket" taxation that protects racing and lower-harm betting while taxing online slots and gaming machines more heavily
• The Treasury is reported to be weighing a doubling of the duty in the Budget on 28 October

The Founder Who Changed Sides Answers the Founder Who Has Not

Stewart Kenny, who co-founded Paddy Power and left its board in 2016, has written to the Financial Times rejecting the warnings made by Betfred's founder about a higher Machine Games Duty, Focus Gaming News reports. "When I represented bookmakers, I used the same script whenever tax was about to rise," Kenny wrote. "We also heard it before curbs were introduced on fixed-odds betting terminals; the predicted devastation did not follow."

He was answering Fred Done, Betfred's chairman and co-founder, who wrote in The Sunday Times and told the Financial Times earlier this month that doubling the standard rate of the duty from 20% to 40%, as the Social Market Foundation has proposed, would close about 495 Betfred shops, 45% of its estate, with the loss of 2,475 jobs. Done said machines provide half of the chain's shop profit, and that "by 2030 we will have no betting shops" if the duty rises. Betfred has already said it will end its Super League sponsorship, citing last year's Budget.

Kenny argued that tax should follow harm. "A bet on a horse or football match is much less harmful than a machine designed for rapid, repetitive play, with near misses built in," he wrote. "High-harm machines should bear tax proportionate to that harm, discouraging operators from steering customers towards their most addictive products." He called for "intelligent, not blanket, taxation of betting to protect racing and other lower-harm betting products, while taxing online slots and other gaming machines more heavily", and concluded: "Scaremongering is no substitute for evidence."

The Same Argument in Dublin

Kenny is making the case on both sides of the Irish Sea. This month he co-signed a letter with addiction specialists and academics, reported by the Irish Times, urging the Irish government to follow Britain's increase in Remote Gaming Duty to 40% with a minimum levy of 40% of gross gambling yield on online casinos, and to raise it further in later budgets towards the near-80% level applied to tobacco. Ireland currently taxes betting stakes at 2%. The Betting and Gaming Council has argued, in response to proposals of this kind, that tax changes on one product affect an operator's whole business.

The Treasury is reported by The Times to be considering an increase in Machine Games Duty before Chancellor John Healey's Budget on 28 October. A doubling would take the three bands from 5%, 20% and 25% to 10%, 40% and 50%, and analysts have told the Racing Post it could cost nearly 3,000 betting shops across the industry.

Kenny's Evidence Point Is the 2019 Stake Cut, and It Is Contested

The strongest part of Kenny's letter is the precedent. Before the maximum stake on B2 machines fell from £100 to £2 in April 2019, bookmakers forecast thousands of closures, and the estate did shrink sharply in the years that followed, though the pandemic makes the cause hard to separate. Kenny reads that as proof that the warnings were overstated; the shop operators read the same closures as proof that they were right. What the precedent does show is that shops survived a cut in machine income far deeper than a duty rise would impose, which weakens the claim that the high street ends by 2030. It does not show that no shops close, and Done's figures are about one chain's estate, not the whole market.

The Harm-Weighted Tax Idea Has Already Been Half Adopted

Kenny's principle, that tax should rise with the intensity of the product, is the logic Britain applied when it took remote gaming to 40% and left general betting lower. Extending it to machines in shops would be consistent, and it would put retail and online slots on a similar footing. The awkward part for the industry is that the principle was once its own argument against blanket increases; Kenny is now using it to justify a targeted one. For the Treasury, a critic with a bookmaker's background is useful cover. For the shops, the question is whether a duty rise lands on a sector already closing branches, as Betfred's own July closures showed.

A former bookmaker has told the Treasury that the industry's warnings are a script. The Budget on 28 October will show whether the Treasury believes him or Fred Done.