UK Chancellor Faces Industry Backlash Over Potential Machine Games Duty Hike

Chancellor John Healey is reviewing options for a machine games duty (MGD) increase ahead of the UK’s Autumn Budget on 28 October 2026. Treasury officials have begun modelling outcomes for a potential duty hike, drawing criticism from the Betting and Gaming Council (BGC) and major retail operators. The BGC warns that a steeper MGD could trigger further betting shop closures and job losses across the UK gambling sector.

Machine Games Duty Under the Spotlight Ahead of the Autumn Budget

Government sources indicate that the Treasury, led by Chancellor John Healey, is actively evaluating changes to MGD as part of its upcoming fiscal measures. MGD is currently set at 20% for Category B machines, which make up the majority of land-based gaming machines. There is also a lower rate of 5% for machines costing £0.20 or less to play, and a top rate of 25% for those costing £5 or more.

Officials are analysing how adjustments to these bands could raise additional funds. The Social Market Foundation, an independent think tank, has suggested doubling the rate on Category B machines to 40%. Their modelling projects that this change could yield up to £458m annually for the Treasury.

Industry Reactions to a Potential Machine Games Duty Increase

The prospect of an MGD hike has prompted strong responses from retail gambling operators and industry analysts. Regulus Partners, a specialist consultancy, forecast that a doubling of the duty could lead to the closure of up to 4,000 betting shops and the loss of around 25,000 jobs. This is in addition to the ongoing contraction of the UK’s betting shop network following the remote gaming duty increase from 21% to 40% in April 2026.

Operators like Flutter and Betfred have already taken steps to reduce their high street presence. Flutter suggested that up to 100 Paddy Power shops could close, adding to the 57 closures it announced last October in the UK and Ireland. Betfred plans to shutter 132 venues, and evoke, the parent company of William Hill, has already closed approximately 270 shops.

The BGC’s statement directly addresses operator concerns:

“We fundamentally oppose any increase in machine games duty. It would put further pressure on betting shops, casinos and other venues, cost jobs and investment, weaken high streets and benefit the growing illegal gambling market.” — BGC Spokesperson

The trade body emphasised that by year-end 2026, over 600 betting shops will have shut and 5,000 jobs will have vanished compared to 2025, largely due to previous duty increases.

Regulatory Context: Precedents and Legislative Outlook

Precedent for increased gambling taxation was set by former Chancellor Rachel Reeves, who earlier moved remote gaming duty to 40% and outlined plans to raise general betting duty from 15% to 25% by April 2027. Prime Minister Andy Burnham has also targeted Adult Gaming Centres, expressing intent to revoke the 'aim to permit' rule, though sources signal possible carveouts for bingo halls and pubs if MGD rises.

Treasury communications have not dispelled speculation. One government source reportedly remarked:

“Increases in gambling taxes are definitely on the table again.”

Chancellor Healey, when pressed in a 7 September speech, declined to comment on specific Budget provisions, stating: “On tax specifics, I’m the chancellor less than two months out from the Budget. I’m not going to speculate on questions of tax.”

Market Impact and Operator Performance

Public markets have reacted to the uncertainty. London-listed Entain’s stock is down 1.5%, Rank Group shares are similarly down 1.5%, while evoke saw a marginal increase. For operators and suppliers with retail exposure, potential regulatory moves represent material headline risk. This policy environment also directly affects casino operators and Adult Gaming Centres as scrutiny extends beyond betting shops.

What Operators Should Expect from the October 2026 Budget

The Budget will be delivered on 28 October 2026. Treasury officials maintain that “the chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”

Stakeholders should prepare for:

• Potential duty increases targeting land-based gaming machines, especially Category B
• Further closures of betting shop estates if headline rates are raised significantly
• Legislative actions targeting Adult Gaming Centres, though possible exemptions for bingo halls and pubs

With the Budget date approaching, the core questions for industry participants will focus on how duty changes affect profitability, staffing, and the sustainability of retail gambling in the UK.