UK Gambling Tax: Healey Weighs Machine Games Duty Rise Aimed at Betting Shops and Arcades
Chancellor John Healey is weighing an increase in Machine Games Duty that would fall on betting shops and adult gaming centres, according to the Financial Times, as the gambling industry braces for a second tax rise in under a year at the Budget on 28 October.
- Treasury officials are modelling higher rates of Machine Games Duty, the tax on gaming machine takings, which raised £641 million in 2025-26, according to HMRC.
- A narrower rise would hit betting shops and adult gaming centres, which pay the duty at the same rates, while pubs are expected to be left out.
- Six betting chief executives have asked Healey to rule out any increase and to pause the rise in online betting duty due in April 2027.
The Financial Times reported that Healey is considering a rise aimed only at betting shops and adult gaming centres, known as AGCs, rather than an increase across every venue with a gaming machine, iGaming Business reported on 19 October. No decision has been announced, and the Treasury has said only that tax decisions are taken at fiscal events.
Most machines are currently taxed at a standard rate of 20 per cent of takings. Because betting shops and arcades pay the same rates, any change aimed at one is expected to catch the other.
What Is on the Table
The most detailed proposal comes from the Social Market Foundation, whose June report called for a new 40 per cent rate that would leave pubs out. The think tank estimated that its plan could raise between £275 million and £458 million a year.
Healey's predecessor, Rachel Reeves, considered a similar rise but dropped it after objections from the industry. She raised Remote Gaming Duty, the tax on online casino profits, from 21 per cent to 40 per cent instead, with the higher rate taking effect in April 2026.
A government source told The Times that higher gambling taxes were "definitely on the table again", and reports have suggested that bingo halls, like pubs, could be spared.
Why Arcades Are in the Spotlight
Adult gaming centres account for only around 4 per cent of spending in the licensed gambling market, according to Gambling Commission figures, but they take about a quarter of licensed machine spending. Betting shops took just under half in 2024-25.
Machine spending began to move away from bookmakers after the maximum stake on fixed-odds betting terminals was cut to £2 in 2019, with casinos, bingo clubs and arcades picking up a larger share. The Social Market Foundation found that the most deprived areas have on average six times as many AGCs as the least deprived.
Dan Waugh, a partner at the consultancy Regulus Partners, warned that a large rise would close many arcades along with bingo clubs, casinos, seaside arcades and betting shops, and that the illegal market could grow without stronger enforcement from the Gambling Commission.
Industry Warns of Closures
On 14 October the chief executives of Entain, Flutter UK & Ireland, bet365, Bally's, Evoke and Betfred wrote to Healey through the Betting and Gaming Council, asking him to rule out further gambling tax rises. The letter follows an earlier warning from the Betting and Gaming Council about job losses.
The six bosses also asked the Chancellor to pause the increase in General Betting Duty on online sports betting, from 15 per cent to 25 per cent, which is due on 1 April 2027, until the impact of this year's Remote Gaming Duty rise has been assessed. Remote betting on UK horse racing is set to stay at 15 per cent.
Analysis by EY for the Betting and Gaming Council estimates that doubling Machine Games Duty on Category B machines to 40 per cent could close between 690 and 1,470 more betting shops and between 28 and 34 casinos, with 11,600 to 15,900 jobs lost. The letter says more than 600 betting shops have already closed since the 2025 Budget.
Entain has said doubling the standard rate would add about £100 million a year to the cost of running its UK shops, and Rank Group has warned that its own forecasts depend on the tax structure staying unchanged.
What Happens Next
The Budget on 28 October will confirm whether machines become a new source of revenue for the Treasury, which needs to fund higher defence spending and cost-of-living measures. Operators remain divided over how hard to fight the rise, but on one point they agree: after the Remote Gaming Duty increase, the high street has little room left to absorb another.
