Rank Group (LSE:RNK) reported 5% like-for-like Revenue growth for its first quarter, but warned in October that any rise in machine games duty could force venue closures.

Rank Group (LSE:RNK), the owner of Grosvenor Casinos and Mecca Bingo, started its financial year with steady trading, according to an update published in mid-October. Like-for-like net gaming revenue rose 5% to £216.1m in the quarter to 30 September, and the company said it was confident of delivering operating profit in line with market expectations for the year.

Digital revenue increased by 6%, led by the Mecca Brand online. Across its venues, revenue also advanced 5%. Grosvenor grew 6%, helped by more visits and higher spending per visit, with gaming machine revenue up 14%. Enracha, the Spanish bingo business, rose 7%, while Mecca venues were flat as customer visits fell, an outcome attributed in part to the hot summer weather.

The group (LSE:RNK) closed three underperforming venues during the period, a sign that it remains willing to prune the estate even as trading in its casinos improves.

About the company

Rank Group is a UK-based gaming and leisure operator whose activities span land-based venues and online play. Its main venue brands are Grosvenor Casinos, which operates casinos across Great Britain, and Mecca Bingo, a chain of bingo clubs that serve a broad social customer base. In Spain it runs Enracha, a network of bingo venues, while its digital arm offers online casino, slots and bingo, with Mecca as the leading online brand.

The group earns its income mainly from net gaming revenue, which is the amount customers stake less winnings paid out, together with food, drink and other spending in venues. Venues carry significant fixed costs such as property, staff and licensing, so footfall and spend per visit have a large effect on profitability. The online Business has a different cost profile, with Marketing and gaming duties among the biggest items.

Strategy centres on improving the quality of the estate, investing in the customer experience and growing digital, while controlling costs. Over the 12 months to 30 June 2026, the article notes like-for-like net gaming revenue of £834.1m and underlying operating profit of £78.6m, with a stated medium-term ambition of at least £100m of underlying operating profit.

Duty speculation looms

Tax remains the dominant theme for the business. Rank warned that any increase in UK machine games duty could force venue closures, with possible Job losses and weaker investment. It has argued that its growth could support the government's economic agenda, provided that tax conditions remain supportive.

The warning follows a period in which the digital business has already had to absorb an increase in remote gaming duty to 40%. Rank has said that digital profit will step down in the current financial year because the higher rate applies for a full 12 months, and it has responded with cost measures across the group.

The full-year figures published on 13 August set out what is at stake. For the 12 months to 30 June 2026, like-for-like net gaming revenue rose 6% to £834.1m, while underlying operating profit climbed 21% to £78.6m, lifting the Margin to 9.4% from 8.1%. Grosvenor delivered underlying operating profit of £35.5m, up 11%; Mecca more than doubled to £8.9m; Enracha rose 8% to £12.0m; and digital advanced 8% to £37.9m.

Statutory measures were weaker. Operating profit fell 7% to £55.7m after £22.9m of items disclosed separately, pre-tax profit dropped 15% to £39.2m, and Basic Earnings Per Share fell 22% to 6.4p. Underlying earnings per share rose 15% to 10.5p. The total Dividend increased by 35% to 3.5p, with a final payment of 2.5p.

How gaming duties shape the business model

Gaming operators in the UK pay duties that are levied on gaming profits rather than on profits after costs, which means a change in the rate can move earnings quickly. Land-based casinos and bingo clubs are exposed to machine games duty, while online operators pay remote gaming duty. Because venue businesses have heavy fixed costs, a higher duty rate can turn marginal sites loss-making, which is why management links tax decisions directly to the future size of the estate.

The mix of businesses therefore matters. A group with casinos, bingo, Spanish venues and a digital arm spreads its risks, but it is also exposed to tax decisions in its largest market.

What to watch next

Several themes are likely to shape the coming months. Policy announcements on machine games duty are the most obvious, given the company's warnings about closures. Trading in Grosvenor's gaming machines, and whether visits to Mecca clubs recover from the soft patch described in the update, will show how balanced the venue business is.

The interim results due on 28 January 2027 will give a fuller picture of how digital profit is coping with the higher duty rate and how far cost measures are offsetting it. Progress towards the medium-term profit ambition will also be tracked through margin changes.

Medium-term ambition

Chief executive Richard Harris said in August that he was confident of delivering further improvement in financial outcomes and solid returns for shareholders, while cautioning that tax increases on land-based venues could result in closures and lower tax receipts for the Treasury. The company paid £225.9m in taxes and duties during the last financial year, £198.9m of that in the UK.

Rank has reiterated its ambition to achieve at least £100m of underlying operating profit in the medium term. Balance Sheet strength provides some support, with net cash of £56.8m before Lease liabilities at the year end, although net Debt was £147.2m on a basis that includes them.

The early part of the new financial year began firmly, with group revenue up 8% in the first six weeks before settling at the 5% rate reported for the quarter as a whole. The next scheduled set of numbers will be the interim results for the six months to 31 December, due on 28 January 2027.

Attention in the meantime is likely to centre on government tax policy and on whether Grosvenor's gains in gaming machine revenue can continue to offset softer footfall at Mecca.