Treasury forecasts £655m from Machine Gaming Duty increase to 25%

HM Treasury has published the reasoning behind its decision to raise Machine Gaming Duty (MGD) by five percentage points to 25%, projecting total receipts of £655m over five years, according to SBC News.

Chancellor John Healey announced the increase in the Autumn Budget on Wednesday 28 October, linking it to a package of business rates relief for high street firms that lifts the threshold for retail, hospitality and leisure premises from £12,000 to £18,000. Arcades, betting shops and vape shops are excluded from that relief.

The change forms part of Prime Minister Andy Burnham's plan to lower costs for roughly 70,000 small businesses on the high street, funded in part by the higher machine duty.

Machines with stakes over £1 or prizes over £100 will shift onto the 25% MGD rate once the change takes effect on 1 April 2027. This principally affects Category B machines. Category C and D machines, with £1 stakes and prizes under £100, remain at the existing 20% rate.

Treasury policy analysis cites three principles behind the move: applying a lower targeted risk approach to gambling, bringing gaming machines together under one shared tax threshold, and collecting the duty through an existing administrative system. The analysis states that higher stakes and prizes carry greater gambling harms, but does not quantify any expected reduction in harm from the measure.

According to the Treasury's own figures, the measure should bring in an extra £135m during 2027/28, with £130m expected in each of the four years that follow, reaching the £655m five-year total certified by the Office for Budget Responsibility.

HMRC's estimate puts the number of affected operators at roughly 5,100, running across some 12,400 active premises, and says that for those shifting from 20% to 25%, duty owed on unchanged net takings will rise by a quarter. The government's assessment concludes the measure is not expected to have any significant macroeconomic impact, a judgement that concerns the wider economy rather than individual businesses or local employment.

The Betting and Gaming Council disputes that assessment. Responding to the Budget, the trade body cited modelling by auditor EY suggesting that a 25% rate could put close to 9,000 jobs at risk and leave as many as 1,000 betting shops and casinos closed or in serious danger of closure. The BGC also warned the higher duty could deter casino investment and push customers towards illegal gambling operators.

BGC chief executive Grainne Hurst described the increase as "a deeply damaging decision and a blow to the thousands of workers, businesses and local communities".

On administration, HMRC expects the change to have a negligible ongoing impact, since operators will continue to use existing MGD registration, quarterly returns and payment arrangements, with only one-off work needed to reclassify machines under the new thresholds.

The Treasury has said it will consider reviewing the revenue effects of the increase after two years of monitoring data, but this stops short of a commitment to a full review of employment or business impacts. It also keeps open the option of raising or lowering machine stake and prize thresholds in future, offering no guarantee that gambling duties will be frozen.

Coming after a decade of regulatory change under the Gambling Review and successive tax rises, the sector has no assurance that this increase will be the last.