Key facts
- Rank Group has reduced its headcount and cut costs due to increased gambling taxes.
- The Remote Gaming Duty (RGD) rate was increased from 21% to 40% in the last Autumn Budget.
- The company is seeking to avoid a financial penalty by offering the Gambling Commission £5m.
- Digital net gaming revenue increased by 12% in the final quarter.
- Grosvenor venues reported a 3% rise in net gaming revenue.
Rank Group, the owner of Grosvenor casinos, has reduced its workforce and cut other costs in response to a significant increase in the Remote Gaming Duty (RGD). The Chancellor, Rachel Reeves, raised the RGD rate from 21% to 40% in the last Autumn Budget, a move that came into effect in April and has forced the company to adapt.
To mitigate the financial impact, Rank Group has slashed marketing spend and supplier costs, alongside making "headcount reductions." The company has maintained targeted digital advertising and customer incentives like bonuses and loyalty rewards to retain players despite the higher levy.
Chief executive Richard Harris acknowledged the tax hike has created "significant cost and taxation headwinds." Despite these challenges, the company reported positive revenue streams, with like-for-like digital net gaming revenue (NGR) growing 12% to £63.9m in the final quarter. Grosvenor venues also saw a 3% rise in NGR to £98.3m, supported by gaming machine performance, even with disruptions from international travel.
Mecca Bingo halls generated £35.4m in NGR, and its Enracha venues reported £11.3m. In a separate development, Rank Group has submitted a regulatory settlement proposal to the Gambling Commission, offering £5m to avoid a financial penalty following an investigation into Grosvenor's casino licence which found evidence of rule-breaking. The watchdog is "minded to accept" the proposal, with the payment to be disclosed separately to avoid distorting profits.
Rank Group's shares climbed 8.3% in early trading to 102.3p, and are up 5.2% since January.