Machine Games Duty Rises to 25% as Feared 40% Hike Is Dropped

What the Chancellor announced

Machine Games Duty is the tax operators pay on the money their gaming machines take, after winnings are paid out. Healey’s change moves the higher-stake machines, the ones you’ll find in betting shops, casinos, bingo halls and adult gaming centres, onto a 25% rate from April 2027. He tied the rise to his plans for the high street, saying the money would help pay for business rates relief, and he made a point of saying that pubs and seaside arcades would be protected. Adult gaming centres, along with vape shops, won’t get the new rates relief at all.

On its own, a five-point rise sounds relatively low. It doesn’t come on its own, though. Online casino tax went from 21% to 40% this April, and the duty on online sports betting goes from 15% to 25% next April, with horse racing left out. For the industry as a whole, it’s the third big tax rise in two years, and this is the one aimed squarely at the high street.

Relief, but not celebration

The industry’s reaction has been a strange mix of relief and anger. Shares in some of the big listed groups reportedly rose because the result wasn’t as bad as expected. But the Betting and Gaming Council called it “a deeply damaging decision”, and modelling it commissioned from EY suggests that even at 25%, almost 9,000 jobs could go and close to 1,000 betting shops and casinos could close or be at serious risk. Betfred has said about a quarter of its shops would become loss-making at the new rate, adding around £10,000 to the cost of running each one.

Racing is worried too, and with good reason. Every betting shop pays money into the sport through the levy and media rights, so every closure means a little less prize money. One industry consultancy has forecast that the rise could close half of Britain’s betting shops over four years and cost racing tens of millions of pounds. That’s at the gloomy end of the range, but it’s a reminder that a tax on machines doesn’t stay in the machines.

We’ve followed this story as it built. In September, I wrote an article on this site about Entain warning the Prime Minister over a doubling of machine tax, and a week later Betfred’s founder predicted that every betting shop could be gone by 2030 if it went ahead.

Did the lobbying work, or was 40% never a real prospect?

This is the question I find most interesting, and I don’t think the answer is as simple as either side would like.

The case that the industry won is easy to make. The 40% idea had real backing: a think tank report, the support of senior figures close to the Prime Minister, and a Prime Minister who had already made his feelings about high street bookies very clear. The industry then threw everything at it. Entain’s chief executive warned the Prime Minister directly, the Betting and Gaming Council commissioned job-loss modelling, Genting warned that a large share of its casinos would become unprofitable, and bingo operators said many of their clubs would start losing money. A month later, the Chancellor went for a rise of a quarter of what had been proposed. It’s hard to argue that none of that made a difference.

But I don’t think 40% was ever as likely as the headlines suggested. The government never formally proposed that figure. It came from a think tank and from politicians outside the Treasury, and even one of that think tank’s own senior people described 25% as a reasonable level. More importantly, the Treasury’s job is to raise money, and a doubling looked likely to raise much less than it promised. If enough shops close, the duty they used to pay disappears, along with their business rates, their staff’s income tax and their contribution to racing. One financial consultant worked out that around 280 betting shop closures would wipe out the extra tax the rise was meant to raise from betting shops. Treasury officials can do that arithmetic as well as anyone.

My view is that the truth is in between. The 40% rate was a real political option, but it was always going to struggle for viability once the Treasury looked at the numbers. What the lobbying did was make sure those numbers were on the Chancellor’s desk, loudly and repeatedly. That’s not the same as winning the argument. The industry didn’t stop a tax rise. It helped talk the government down to one it could live with, after a year in which it had already lost every other tax fight.

What it means if you play

If you only gamble online, this one won’t change much for you directly. The bigger changes for online players were the remote gaming duty rise this April, and the online betting rise coming next April, which I covered in an article on this site about the link between those tax rises and the growth of offshore gambling. If you like a bet in a shop, expect fewer shops over the next couple of years, especially in smaller towns, and expect operators to look harder at which machines and which branches are worth keeping.

The gambling industry has spent the day saying it dodged a bullet, and in a narrow sense it did. But it’s worth remembering what counts as good news now: a 25% rise in a tax, on top of two other big rises, announced to relief and rising share prices. Two years ago, nobody in this industry would have called that a good day. That tells you how far expectations have fallen, and how much the next Budget will be watched by every bookmaker in the country.