UK Budget Raises Machine Gaming Duty to 25%, Industry Groups Warn of Closures

Chancellor Confirms 25% Duty Rate

Chancellor of the Exchequer John Healey announced during the 2026 Budget that the United Kingdom will raise the Machine Gaming Duty (MGD) for higher stakes machines from 20% to 25%. The move finalizes a tax increase that was previously floated at a steeper 40% rate, representing a compromise between the initial proposal and the current statutory level.

Healey stated that the revenue generated by the duty increase is intended to support high streets. “To pay for this support for our high streets, I am raising taxes on gambling – by increasing Machine Games Duty from 20 per cent to 25 per cent for higher stakes machines, while protecting pubs and seaside arcades,” Healey said. The specific exclusion of pubs and seaside arcades was emphasized to distinguish the new levy from broader taxation measures that might affect leisure venues.

Industry Response Cites Job and Venue Losses

The Betting and Gaming Council (BGC) issued a statement describing the decision as “deeply damaging” to the regulated sector. The industry body argued that the increase is a blow to workers, businesses, and communities dependent on the betting and gaming industry. According to the BGC, as many as 9,000 jobs are at risk, and up to 1,000 betting shops and casinos face a serious risk of closure.

“Every betting shop or casino closure means lost livelihoods, more empty premises and another huge blow to our high streets,” the BGC stated. The council added that these venues would not simply be replaced, particularly in areas already struggling to attract jobs and investment. The BGC also noted that the long-term impact on the national budget from the raised levy may differ from government expectations due to potential reductions in activity.

Operators Absorb Costs Across Channels

Operators with mixed portfolios of land-based and online products face complex financial pressures. Stakeholders, including Betfred, warned that raising tax on one aspect of the industry does not work in a vacuum. Companies running both online and land-based operations must absorb costs from one area into the next, creating a cross-subsidization challenge that affects overall profitability.

Recent workforce reductions across the sector underscore the financial strain. Flutter Entertainment announced it is cutting up to 1,400 people from its United Kingdom and Ireland division. This round of layoffs is described as the most significant recently announced by a gaming entity in the UK. Earlier in the year, bet365 announced hundreds of layoffs in anticipation of the duty increase. Other companies, such as Evoke, have also cited the regulatory environment as a factor in structural changes.

Impact on Racing and Community Support

Beyond immediate job losses, the duty increase has secondary effects on broader industry commitments. A primary impact is the reduction in company funds available to support horse racing in the United Kingdom. Several companies are ending racing partnerships they previously maintained, citing the inability to sustain those expenditures under the new tax regime. This shift reduces the financial support that racing has historically received from betting and gaming operators.

The 2026 Budget marks a definitive shift in the UK’s approach to taxing machine gaming. While the final rate of 25% is lower than the 40% peak discussed in earlier consultations, the industry maintains that the cumulative effect on high-stakes machine economics will force consolidation and closure. The government’s position remains that the revenue will be directed toward high-street support, while operators continue to assess the long-term viability of their land-based networks under the new fiscal burden.

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