Rank Group, the owner of Grosvenor casinos, has reduced its workforce and slashed costs following the government’s decision to sharply raise online gambling taxes.
Chancellor Rachel Reeves increased the Remote Gaming Duty rate from 21 per cent to 40 per cent in last year’s Autumn Budget, with the change taking effect in April.
The levy increase left Rank Group scrambling to absorb the financial blow and protect revenue across its digital and physical gambling operations.
To offset the impact, the company cut marketing expenditure and supplier costs, alongside making what it described as “headcount reductions” to mitigate the pressure.
Despite the broader pullback on spending, Rank Group opted to maintain targeted digital advertising and customer incentives such as bonuses and loyalty rewards to retain players online.
Chief executive Richard Harris, appointed as the permanent head of the casino group earlier this week, admitted the tax rise had caused “significant cost and taxation headwinds” for the business.
Shares in Rank Group climbed 8.3 per cent in early trading to 102.3p, leaving the stock up 5.2 per cent since January, suggesting investors welcomed the company’s response to the pressures.
The Maidenhead-headquartered FTSE 250 group also confirmed it had submitted a regulatory settlement proposal to the Gambling Commission in a bid to avoid a formal financial penalty.
Rank Group offered to pay the gambling watchdog £5m after an investigation into the Grosvenor casino licence found evidence of rule breaking by the business.
The Gambling Commission confirmed it was “minded to accept the settlement proposal” and is awaiting the official paperwork before finalising the agreement.
The £5m payment is set to be recorded as a separately disclosed item in the company’s accounts to prevent the charge from distorting overall profit figures.
Despite the turbulence, the decision to maintain targeted digital advertising delivered results, with like-for-like digital net gaming revenue growing 12 per cent in the final quarter to £63.9m.
Grosvenor venues recorded a three per cent rise in net gaming revenue to £98.3m, despite what the company described as “disruption to international travel” caused by the conflict in the Middle East.
Venue performance was bolstered by strong gaming machine results, helping physical casino sites hold their ground against a difficult trading backdrop.
Mecca Bingo halls saw net gaming revenue reach £35.4m during the period, while the company’s Enracha venues reported net gaming revenue of £11.3m.