Chancellor John Healey is considering an increase to Machine Games Duty (MGD) on gaming machines in the 28 October Budget, according to The Times, reviving a proposal the Social Market Foundation (SMF) estimates would raise between £275 million and £458 million a year.
“Increases in gambling taxes are definitely on the table again,” a government source told the paper. Healey took over the Treasury on 20 July in Prime Minister Andy Burnham’s government, and has until 28 October to close a gap in the public finances.
MGD is charged on the net takings of gaming machines at three rates: 5% on low-stake machines, 20% standard, and 25% on machines where the maximum stake is above £5. The measure under discussion targets the standard rate paid on Category B machines, the higher-stake devices found in betting shops, casinos and adult gaming centres.
What the Social Market Foundation proposed
The proposal comes from “Addressing the Harm”, published by the SMF in June 2026 and written by chief economist Gideon Salutin and senior researcher Richard Hyde. It recommends doubling the MGD rate on Category B machines from 20% to 40%, bringing land-based machines into line with remote gaming duty. Category C machines would stay at 20% and Category D at 5%.
The SMF puts the yield at up to £458 million a year if player behaviour does not change, and £275 million to £458 million once reduced play is factored in. Every additional 5 percentage points above the current 20% is worth £51 million to £114 million, according to the same modelling.
The think tank ties the rate to harm data rather than revenue alone. It cites Problem Gambling Severity Index scores showing 26.5% of casino machine users and 16.9% of slot and fruit machine players in the problematic range, against 4.5% across gambling as a whole.
Where the machines are
Adult gaming centres (AGCs) account for 42% of electronic gaming machines in Great Britain across roughly 1,450 venues. Betting shops add around 5,500 sites across the UK. Machine income carries a large share of the fixed costs in both estates, which is why a duty change lands on the retail side of the market rather than online.
Regulus Partners has modelled the effect of a 40% rate and estimates 70% of betting shops, about 4,000 venues, and 90% of AGCs, about 1,300 venues, would close. The consultancy puts direct job losses at 43,000 and expects around half of the displaced spend to move to the black market. Those are projections from a single firm, not confirmed outcomes, and they sit above the closure numbers the sector has recorded in recent rounds of cuts across the industry.
Bacta has a two-day window
Trade body Bacta set a 9 September deadline for submissions to the Treasury ahead of the Budget. A member survey found 90% expected a severe negative impact from an MGD increase.
“We have an extremely small window to present Bacta’s case,” said Bacta president Joseph Cullis.
The Betting and Gaming Council (BGC) has taken the same position. A spokesperson said the body “fundamentally oppose any increase in Machine Games Duty”, warning that a rise would “put further pressure on betting shops, casinos and other venues, cost jobs and investment, weaken high streets and benefit illegal gambling”.
The 2025 Budget precedent
Retail machines were left alone last year while online rates moved. The 2025 Budget raised remote gaming duty from 21% to 40% from April 2026 and general betting duty on online sports betting from 15% to 25% from April 2027. Operators with both online and retail estates absorbed the first increase this year and are now exposed to a second on the shop floor. Valuations in the UK-listed group have fallen over the same period, with Entain demoted to the FTSE 250 this month.
Licensing changes running alongside
The tax question is moving at the same time as a licensing one. The Times reports that Burnham plans to revoke the “aim to permit” duty, the presumption in the Gambling Act 2005 that licensing authorities grant applications unless they conflict with the licensing objectives. Removing it would give councils direct control over where betting shops and gaming centres can open, with carve-outs under discussion for pubs and bingo halls.
Together the two measures would change both the cost base and the planning position of the same venues in the same year.
Bacta’s submission closes on 9 September and the Budget is presented to the House of Commons on 28 October. Nothing in the SMF report binds the Treasury, and no rate has been confirmed. What the sector will be reading on Budget day is whether Healey takes the full 20 points, a smaller increase, or leaves machine duty where it is for a second year.
Source: The Times
