The UK government has opted to increase the Machine Games Duty (MGD) from 20% to 25%, following speculation that a much steeper rise was on the table. While this 5% increase is less severe than the 40% rate proposed by some think tanks, it still signals a continued focus on gambling operators as a source of tax revenue amid economic hardship.
Industry Lobbying Fails to Shift Perceptions
Operators and industry stakeholders mounted campaigns highlighting their economic contributions and the social role of betting shops, particularly as community hubs. However, these efforts have struggled to counter negative perceptions and have often been met with criticism from politicians and campaigners. For example, a video from Entain about the community value of betting shops was publicly criticized by an MP, illustrating the challenges operators face in influencing public debate.
Impact Across the Industry
The 5% rise in MGD will not affect all operators equally. Large, established companies may be able to absorb the additional costs, but smaller, independent businesses—especially those in rural, coastal, and tourist-dependent areas—face a more precarious future. Many of these venues are already contending with rising energy costs, higher commercial rents, and increases in the minimum wage. Industry representatives warn that further financial pressure could lead to closures, impacting local economies and year-round employment.
Why This Matters for Stakeholders
The decision to raise MGD highlights the ongoing risk for operators, affiliates, and suppliers in the UK market. Taxation on gambling remains politically attractive and is unlikely to face public opposition, making future increases possible. For smaller operators, the inability to offset higher costs due to regulatory caps on stakes and prizes creates a challenging environment. Affiliates and suppliers may also feel secondary effects if venue closures or reduced investment follow.
Key takeaways
- The UK has increased Machine Games Duty from 20% to 25%, avoiding a steeper hike.
- Industry lobbying has struggled to shift negative public and political perceptions.
- Smaller operators, especially in tourist areas, may face closures as costs rise.
- Gambling taxation remains an easy target for future government revenue needs.
Update (28.10.2026)
Additionally, Adult Gaming Centres will lose access to business rate reliefs under the same government package that raised Machine Games Duty. The government clarified that the increased gambling taxes are intended to fund business rate reliefs for other industries, with vape shops also excluded from these reliefs.
Update (28.10.2026)
On 28 October, Chancellor John Healey officially confirmed the Machine Games Duty increase in the House of Commons. The 25% rate will specifically target Category B machines in casinos, betting shops, and bingo venues, while pubs and seaside arcades will remain exempt. Additionally, the Business Rates Transitional Relief supplement will be extended for a further two years. The Social Market Foundation expressed public support for the tax increase but questioned its effectiveness, with Chief Economist Gideon Salutin noting that the rise is relatively limited and may not significantly affect industry behaviour.
Update (28.10.2026)
Reform UK leader Nigel Farage has voiced strong criticism of the MGD increase, warning that it will result in further betting shop closures and harm the British horse racing industry. Farage argued that the higher tax will push bettors towards the black market, benefiting criminal organizations, and likened the situation to the shift seen in the tobacco industry. He also noted that serious bettors are increasingly turning to offshore operators due to stringent compliance requirements. Additionally, the Office for Budget Responsibility (OBR) now projects that the MGD hike will generate an extra £100 million annually by 2027/28.
Update (29.10.2026)
The Betting and Gaming Council (BGC) has cautioned that the latest MGD hike could endanger nearly 9,000 jobs and place around 1,000 betting shops and casinos at risk of closure, citing EY projections. The BGC also noted that the industry is already facing £1.7 billion in tax increases from last year's budget, with further rises in Remote Gaming Duty and general betting duty scheduled for 2026 and 2027. Since the previous budget, more than 600 betting shops have closed or announced closures, affecting over 11,000 jobs. The additional revenue from the MGD increase is intended to support a higher small business rates relief threshold for retail, hospitality, and leisure. Casino operators such as Rank Group and Genting Casinos have expressed concerns about the impact on investment and the need for greater tax certainty.
Update (29.10.2026)
Entain has projected an additional annual cost of £25 million ($33.25 million) due to the Machine Games Duty (MGD) increase, but aims to fully offset this by the end of 2028 through estate rationalization, group-wide optimization, and potential market share gains. The company's FY26 guidance and its £500 million annual adjusted cash flow target for 2028 remain unchanged. The 25% MGD rate will be applied to Type 2 gaming machines in Entain's shops from April 1, 2027, specifically affecting machines with stakes over £1 or prizes over £100, while lower-stake machines will retain the current rate. Additionally, from April 1, 2028, machine suppliers will be liable for duty on supplier-owned machines under profit-sharing arrangements. The government anticipates these changes will generate £135 million in 2027/28 and £150 million in 2028/29. Remote gaming duty increased from 21% to 40% on April 1, 2026, and general betting duty on remote betting will rise from 15% to 25% on April 1, 2027. In response to the rise in remote gaming duty, Flutter plans to cut up to 1,400 jobs in its UK and Ireland business.
Update (29.10.2026)
Campaigner Matt Zarb-Cousin accused the gambling industry of 'crying wolf' in response to the Office for Budget Responsibility's report on the tax changes. Vaughan Lewis called for an independent review to determine if the tax changes have effectively reduced gambling harm, and highlighted that more than 3,200 jobs have been lost, hundreds of betting shops have closed, and racing sponsorship has dropped by 17% since the changes. Labour MP Alex Ballinger welcomed the MGD increase and the exclusion of adult gaming centres from business rates relief, describing these as measures that prioritize communities. Green Party leader Zack Polanski criticized the government for not going far enough with gambling taxes, arguing the measures remain too lenient on gambling companies. Meanwhile, Rupert Lowe, leader of the Restore Britain party, sparked controversy within his party by stating support for British gambling.
Update (29.10.2026)
Buzz Bingo has criticized the government's decision, noting that the removal of Bingo Duty in April was effectively offset by the subsequent MGD increase, which now threatens hundreds of jobs and could hinder further investment in bingo halls. Meanwhile, The Rank Group estimates that the MGD rise will add around £9 million to its annual costs, with duty expenses for the year ending 30 June 2027 expected to increase by approximately £2 million. Rank plans to share a comprehensive update on the financial impact and its response strategies when it releases interim results on 28 January 2027.