Bingo licence loophole may shield slot halls from new tax

Hundreds of high street gaming arcades could continue claiming a discount on their business rates despite a budget measure meant to end it, because the venues hold bingo licences rather than adult gaming centre (AGC) licences, according to analysis by Guardian gambling.

Chancellor John Healey used his first budget to raise duty on slot machine takings from 20% to 25%, a levy that also applies to bookmakers and casinos. He announced that AGCs and vape shops in England would lose eligibility for the business rates discount aimed at leisure and hospitality firms, describing the move as "raising taxes on gambling to support good growth on every high street".

Andy Burnham, who has repeatedly criticised AGCs as prime minister, backed the policy on Instagram after the budget, framing it as part of his drive to improve British high streets.

Guardian gambling's analysis suggests many shops owned by Merkur and Admiral, the UK's two largest slot farm operators, could avoid the tax change, since the venues in question are registered under bingo licences even though they appear to run almost entirely as slot machine halls.

Gambling Commission records indicate that more than 200 arcades are licensed as bingo venues despite appearing geared towards slot play, though some data is duplicated, making exact numbers difficult to establish.

When Guardian gambling visited four Merkur-owned sites and one Admiral-owned site, all advertised bingo in their shop windows, but the premises were dominated by slot machines, with bingo confined to a small cluster of tablets. In one case, captured on covert filming, a staff member said nobody used the bingo tablets, which appeared not to be in working order.

The rest of that venue was dedicated to category B3 machines, which let players stake £2 on a spin every two and a half seconds for a top prize of £500. Several studies have found this category of machine carries a greater risk of gambling harm than most other gambling products.

One site identified as operating under a bingo licence is the Merkur Slots branch in Stockport. There, Wendy Hughes, who had terminal cancer, lost £2,000 across two sessions that together lasted 16 hours. Merkur was fined £100,000 after Guardian gambling reported the details of her losses. Hughes has since died.

Operators could also convert remaining AGC licences into bingo licences, potentially widening the loophole further.

Labour MP Alex Ballinger, who co-chairs the gambling reform all-party parliamentary group, said he welcomed the duty rise but told ministers they must act to stop operators sidestepping it. "We must ensure these licences cannot be used to sidestep the new business rates rules," he said, urging the Department for Culture, Media and Sport to press ahead with proposals to tighten licensing rules under an existing consultation. "The government has already recognised this problem, and I am confident ministers will work with the regulator to close loopholes and ensure enforcement going forward," he said.

Paul Turner-Mitchell, a business rates expert at the real estate intelligence firm Altus Group, said the practical effect of the policy would depend on how the Treasury defines an AGC and how local councils enforce the rules. "A bingo licence alone does not settle its business rates treatment," he said.

Merkur and Admiral did not respond to requests for comment from Guardian gambling.

Joseph Cullis, president of the arcade trade body Bacta, said the wider duty increase would hit the sector hard. "My great-grandfather started our family business back in 1962, and we've spent more than 60 years building it into what it is today," he said. "Like many of the family-run businesses I represent across the sector, this decision will force us to reconsider investment and make difficult decisions about our future. Even larger operators will now be forced to scale back their plans."