UK lifts machine duty to 25%, shifts bill to suppliers

• Machine Games Duty on higher-stakes machines rises from 20% to 25% from April 2027.
• Treasury costings show the measure raising £135m in 2027-28.
• Liability for supplier-owned profit-share machines moves to suppliers from April 2028.

UK Chancellor John Healey has raised Machine Games Duty (MGD) from 20% to 25% on higher-stakes machines in his first Budget, delivered on 28 October.

The rise helps fund a business rates freeze for the high street and stops well short of the 40% rate operators had feared.

The Chancellor’s trade-off

Healey told MPs the revenue would support high streets. The Budget document ties the MGD increase to a real-terms business rates freeze for retail, hospitality and leisure properties.

John Healey, Chancellor of the Exchequer, said:

“To pay for this support for our high streets, I’m raising taxes on gambling by increasing Machine Games Duty from 20% to 25% for higher stakes machines, whilst protecting pubs and seaside arcades.”

He also doubled the bank surcharge from 3% to 6% for 15 months from 1 January 2027. That measure funds household energy support.

Where the line falls

The higher rate takes effect on 1 April 2027. It applies to machines with stakes above £1 or prizes above £100. Lower-stake machines keep their existing rates, which the government says protects pubs and seaside arcades.

Under Gambling Commission limits, every Category B machine carries a maximum stake of at least £2, which places the category in the 25% band. Category C machines, capped at a £1 stake and £100 prize, stay outside it.

Treasury costings show the measure raising £135m in 2027-28 and £150m in 2028-29, before settling at £145m a year. Those figures also include a change to who pays the duty.

Adult gaming centres take a second hit. Healey confirmed they will be excluded from business rates relief, alongside vape shops.

Suppliers inherit liability

From 1 April 2028, MGD liability moves to the machine supplier for supplier-owned machines operated under profit-share arrangements. HMRC set out the plan in a new liability consultation.

Premises licence holders, permit holders and pub tenants stay liable where they own a machine outright. The same applies where they run it on a fixed rental or lease and control the takings.

The consultation opened on 28 October and closes on 20 January 2027. For suppliers on profit-share terms, the duty now lands on their own books.

Doubling off the table

The outcome closes months of lobbying on both sides. The Social Market Foundation (SMF) proposed doubling MGD in June, a plan later backed by former prime minister Gordon Brown.

Earlier this month, 90 Labour MPs wrote to Healey seeking a higher rate on Category B machines. Last week, The Times reported a five-point rise instead.

Operators count the cost

For the Betting and Gaming Council (BGC), the smaller rise is still a heavy one. It said EY modelling of the 25% rate suggests almost 9,000 jobs could be lost. Almost 1,000 betting shops and casinos could close or face serious risk of closure.

The trade body added that more than 600 betting shops have closed or announced closure since last year’s Budget.

Grainne Hurst, CEO at the Betting and Gaming Council, said:

“This is a deeply damaging decision and a blow to the thousands of workers, businesses and communities who depend on Britain’s regulated betting and gaming industry.”

Land-based casino groups face the sharpest questions on capital allocation. Rank Group added 850 terminals across 37 Grosvenor casinos in its last financial year. Gaming machine revenue then grew 14% in its latest quarter.

The same quarter saw Rank close Grosvenor venues in Swansea, Reading and Sunderland. Its chief executive addressed the Budget in the group’s Q1 trading update on 15 October.

Richard Harris, CEO at Rank Group, said:

“Speculation regarding the upcoming Budget continues to weigh heavily on investor sentiment, but our message has been clear: any increase to Machine Games Duty will increase costs, reduce venue viability, lead to venue closures and job losses, reduce tax receipts and halt investment.”

The restructuring continues. Flutter has proposed up to 1,400 redundancies across the UK and Ireland. Entain is consulting on 400 customer care roles, and Evoke has already cut 270 shops from its estate.

The rise also reaches British racing. The BGC said the industry contributes around £350m a year to the sport.

Renshaw said Arena Racing Company estimates that shop closures since the last Budget have cost racing £17m in levy and media rights.

April’s double squeeze

The timing compounds the pressure. Remote betting moves to a new 25% General Betting Duty rate in April 2027, the same month the higher MGD rate lands. Remote Gaming Duty already rose from 21% to 40% in April 2026.

Omnichannel groups will therefore absorb two duty rises in the same month. Boards now have to model a new cost base for retail and online at once, with estate reviews likely to run through the winter.

Betfred founder Fred Done has already warned that high street betting faces an existential threat. Flutter gives investors the first post-Budget read when it reports Q3 results on 4 November.

Suppliers face a deadline of their own. For manufacturers running profit-share deals, the January consultation close is the next chance to shape how the 2028 liability shift works.