The UK Treasury Evaluates Increasing Machine Games Duty in Upcoming Budget
Chancellor John Healey is contemplating raising the rate for category B machines in the October budget, raising concerns among operators and analysts about potential shop closures and job losses.
Key Takeaways
- The UK Treasury is analyzing an increase in the machine games duty for gaming machines in October 2026.
- A tax hike could double the rate for category B machines from 20% to 40%, generating up to £458 million annually.
- Regulus Partners forecasts the closure of up to 4,000 betting shops and the loss of 25,000 jobs due to this possible increase.
- Betting shops and the BGC criticize the measure and warn of increased pressure on the legal retail channel.
- The Budget will be presented on October 28, 2026, and includes other significant tax increases relevant to the sector.
The UK Treasury is considering raising the ‘machine games duty’ in the upcoming autumn Budget scheduled for October 28, 2026. This initiative, attributed to Chancellor John Healey, has already faced strong criticism from the Betting and Gaming Council (BGC) and raises concerns about the impact on operators and employment nationwide.
Machine games duty: current rates and potential changes
The ‘machine games duty’ applies to the majority of land-based gaming machines in the UK, including category B. Currently, the general rate stands at 20% for these machines. There are two additional rates: a reduced rate of 5% for machines with stakes of £0.20 or less, and a higher rate of 25% for those with stakes of £5 or more.
According to a proposal by the Social Market Foundation, a think tank, the rate applicable to category B machines could double to 40%. If this increase were implemented, the Treasury estimates additional revenue of up to £458 million annually, primarily from betting shops with fixed-odds betting terminals (FOBTs), which total over 22,000 units and currently generate around £1.2 billion annually in gross revenues and approximately £240 million in taxes from this route.
Expected impact on operators and employment
Sector analysts, such as Regulus Partners, warn that doubling the tax rate could lead to the closure of up to 4,000 betting shops and the loss of about 25,000 jobs. Operators have already been reducing their retail locations following the increase of the remote gaming duty to 40% from 21% on April 1.
Recent actions illustrate this trend:
- Flutter estimates it will close up to 100 Paddy Power locations, adding to 57 closures announced last October across the UK and Ireland.
- Betfred will close 132 shops.
- Evoke, the owner of William Hill, has closed around 270 locations.
These measures reflect the pressure on the traditional retail betting sector, according to the BGC and other stakeholders observing a consistent decline in employment and the terrestrial commercial network.
Government perspective and stance of the regulated
Anonymous sources cited by The Times indicated that “tax increases on gambling are back on the table.” Additionally, Prime Minister Andy Burnham is considering repealing the ‘aim to permit’ rule that currently benefits Adult Gaming Centres. A government informant highlighted the different political considerations towards bingo and pubs, sectors that would likely be exempted from potential machine games duty increases.
Chancellor Healey himself, during his first relevant speech as Treasury head on September 7, avoided confirming future fiscal moves:
“Regarding specific taxes, I am the Chancellor less than two months before the Budget. I will not speculate on fiscal matters,” Healey stated.
Meanwhile, the Treasury expressed that Healey’s focus is on “boosting business, assisting with the cost of living, and supporting citizens throughout the country,” and that fiscal measures will be formally announced during the budget events.
Sector responses to a potential increase in machine games duty
The sector frames the discussion in the same context as the increase in the remote gaming duty. A spokesperson for the Betting and Gaming Council stated:
“We fundamentally oppose any increase in the machine games duty. Raising it would put more pressure on betting shops, casinos, and other venues, cost jobs and investment, weaken main streets, and favor the growing illegal market.”
According to the BGC, over 600 betting shops will have closed and around 5,000 jobs will be lost by the end of 2026, as a result of recent tax increases.
Entain and Rank Group, listed on the London Stock Exchange, experienced a 1.5% drop in their shares after the news became public. In contrast, Evoke saw a slight increase.
Regulatory context and next steps
The upcoming Budget, where the eventual increase could be formalized, will be presented on October 28. Additionally, former Chancellor Rachel Reeves had already initiated a progressive increase of the general betting duty from 15% to 25%, set to take effect in April 2027.
The expectation in the sector focuses on how the Government will balance tax revenue with industry sustainability and employment, in a context where the debate regarding tax pressure and the protection of the legal channel remains open.
Frequently Asked Questions
What is the machine games duty in the UK?
The machine games duty is a tax applied to most land-based gaming machines, including category B machines. Currently, the standard rate is 20%, with variations of 5% and 25% depending on the stake per play.
When could the increase in machine games duty take effect?
The increase is being discussed for the autumn Budget, scheduled for October 28, 2026. However, Chancellor Healey has not confirmed the measure or specified implementation timelines.
What impact would the increase in machine games duty have on operators?
Analysts warn that doubling the rate to 40% could lead to the closure of up to 4,000 locations and the loss of 25,000 jobs, affecting operators like Flutter, Betfred, and Evoke.
What is the Betting and Gaming Council's stance on the tax increase?
The BGC strongly opposes any increase, arguing it would weaken the legal channel, increase operational costs, and promote illegal gambling in the UK market.
Are there other significant tax increases relevant to the gaming sector in the UK in 2026?
Yes, the remote gaming duty has already increased to 40%, and the general betting duty will rise from 15% to 25% in April 2027, according to previous decisions by former Chancellor Rachel Reeves.
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About the author
Miguel Sandoval
Regulatory Affairs Correspondent
Miguel Sandoval tracks gambling legislation, licensing, and regulator enforcement — from Spain's DGOJ and the Latin American authorities to the UKGC, the MGA, and the state-by-state map in North America. The reports answer three questions precisely — what changed, where, and who it affects — with jurisdictions, dates, and penalties cited exactly as published. Operators and compliance officers read Miguel Sandoval to know which rulebook moved before their next meeting.
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