Machine Games Duty Rises to 25% in UK Budget

UK Chancellor John Healey has confirmed a five-percentage-point rise in Machine Games Duty, taking the rate on higher-stakes Category B gaming machines from 20% to 25%. The increase, announced in the Autumn Budget on 28 October, is intended to help fund a business rates relief package for high streets. It is substantially smaller than the doubling to 40% that had been speculated in the weeks before the statement.

What happened to Machine Games Duty

Machine Games Duty in the UK’s retail gaming sector rose by five percentage points in the Autumn Budget, with the rise from 20 per cent to 25 per cent confirmed by Healey in the House of Commons on Wednesday, October 28
.
The increase applies to Category B machines in casinos, betting shops and bingo venues, but will not affect pubs and seaside arcades, and it will pay for business rates relief that adult gaming centres and vape shops will not be entitled to
.

Healey told the Commons the measure was designed
“to pay for this support for our high streets, I’m raising taxes on gambling by increasing Machine Games Duty from 20 per cent to 25 per cent for higher-stakes machines, whilst protecting pubs and seaside arcades”
. The new rate is due to take effect in April 2027, leaving operators a window to plan for the change.

The decision followed months of lobbying.
An analysis commissioned by the Betting and Gaming Council and conducted by Ernst & Young had estimated that raising Machine Games Duty to 40 percent could put up to 1,470 betting shops and 15,900 jobs at risk
. In the event, the government opted for the lower of the two figures under consideration.

Why it matters

The Machine Games Duty rise lands on top of an already heavy tax burden for UK land-based and omnichannel operators.
It comes after the increase in Remote Gaming Duty from 21% to 40% in April 2026, and ahead of the increase in General Betting Duty from 15% to 25% next April, with retail betting excluded from that latter rise
. Together these changes represent a sustained squeeze on margins across both the digital and retail sides of UK betting and gaming businesses.

Trade body reaction was sharply critical despite the lower-than-feared figure. The Betting and Gaming Council described the rise as a damaging decision that will add cost pressure across the sector.
The change adds further pressure in particular to omnichannel operators such as Paddy Power, Betfred and William Hill, which are already mitigating the impacts of previously announced tax rises
. Investors appeared to take a more sanguine view of the outcome than operators themselves, given that the increase avoided the steeper scenario markets had priced in.

For affiliates and performance marketers, further land-based cost pressure typically accelerates the shift of marketing budgets toward digital acquisition channels, reinforcing the importance of SEO and paid search strategies that can demonstrate efficient player acquisition cost as retail estates contract.

The bigger picture

This is the second consecutive Autumn Budget to target UK gambling taxation, following Rachel Reeves’s near-doubling of Remote Gaming Duty a year earlier. Prime Minister Andy Burnham’s government has consistently framed these measures as part of a wider push to fund high street support, positioning gambling taxation as a politically convenient revenue source. The gradual, staged approach, choosing a 25% rate over the 40% alternative, suggests the Treasury remains wary of the shop closures and job losses that trade bodies warn punitive duty rates would trigger.

The outcome also reflects an intense lobbying effort that played out in public over recent weeks, echoing similar pressure seen elsewhere in Europe, as detailed in our coverage of Gibraltar’s gambling tax lobbying push ahead of the UK budget. With General Betting Duty still set to rise next April, UK operators are unlikely to see tax pressure ease in the near term, keeping cost management and channel diversification firmly on the boardroom agenda.

Sources

• SBC News – John Healey ups gambling machine tax to pay for UK high street relief
• Gambling News – UK Raises Its Machine Games Duty, Despite the Industry’s Warnings
• iGaming Business – UK budget uncertainty: Is a 5% MGD hike really a win?
• InterGame Online – Machine Games Duty rises to 25% in UK Budget
• InterGame Online – BGC brands UK Machine Games Duty rise ‘deeply damaging’