Healey Raises Machine Games Duty to 25% on Higher-Stake Machines

Chancellor John Healey has lifted Machine Games Duty by five points on machines with stakes above £1 or prizes above £100, and HMRC is consulting on making suppliers pay it. The rise is far smaller than the 40% campaigners modelled, and adult gaming centres also lose their business rates relief.

• Machine Games Duty (MGD) will rise from 20% to 25% on machine games with stakes over £1 or prizes over £100 from 1 April 2027, the Budget says, with rates on lower-stake machines unchanged
• The policy costings put the yield at £135 million in 2027-28 and £130 million a year after that, money the Budget ties to a real-terms business rates freeze for high street properties in England
• HMRC is consulting until 20 January 2027 on moving MGD liability to machine suppliers for supplier-owned machines run under profit-share arrangements, from 1 April 2028
• The rate matches what The Times reported on 20 October and falls well below the 40% Category B rate cited by 90 Labour MPs
• The Betting and Gaming Council (BGC) called the rise "a deeply damaging decision" and says EY modelling of the 25% rate puts almost 9,000 jobs at risk

The Budget Splits the Standard Rate at £1 and £100

Healey delivered the United Kingdom Budget on 28 October. The Budget document says the MGD rate "will increase from 20% to 25% on machine games with stakes over £1 from April 2027"; its duty table and the costings add prizes over £100 and fix the date as 1 April 2027. The document calls these "higher-risk machines, which are more associated with gambling harm and commonly found in venues such as adult gaming centres". The government is "maintaining the existing rate for lower-stake machines" to protect pubs and seaside arcades, it says.

Under HMRC guidance, MGD has three bands today: 5% for machines costing 20p or less to play with prizes of £10 or less, 20% for the standard band, and 25% for machines costing more than £5 a play. The new threshold sits at the Gambling Commission's limits for Category C machines, a £1 stake and a £100 prize. Every Category B machine, with stakes of £2 or £5, is above it: B2 and B3 machines in betting shops, B3 and B4 machines in adult gaming centres (AGCs) and bingo halls, and B1 casino machines.

The costing behind the £135 million and £130 million figures assumes operators pass some of the duty on by lowering return to player, uses an elasticity of minus 0.95, and assumes 25% of the stakes lost from machines move to Remote Gaming Duty.

Rates Relief Pays for the Rise, and AGCs Lose Theirs

The Treasury's summary says the business rates package, a real-terms freeze for retail, hospitality and leisure properties in England in 2027-28 and 2028-29, is paid for partly by "increasing gambling tax on higher-risk machine games" alongside VAT collection by online marketplaces.

AGCs are cut out. From April 2027, AGCs and vape shops in England lose the retail, hospitality and leisure multipliers, a measure the costings score at £10 million a year. The Ministry of Housing, Communities and Local Government's "Hope on the High Street" strategy, published the same day, cites concern over "the disproportionate clustering of gambling premises, particularly adult gaming centres", and says it will consult on requiring planning permission for new AGCs.

HMRC Wants Suppliers to Pay Where They Hold the Keys

At present the person responsible for the premises registers for and pays MGD, even where a supplier owns the machine. HMRC's consultation, open from 28 October to 11.59pm on 20 January 2027, would move liability to the supplier where it owns the machine under a profit-share deal. Premises operators would stay liable where they own the machine outright, or rent or lease it for a fixed fee and control the takings.

HMRC says liability should rest with "the person best placed to comply with the duty", usually whoever controls the takings and holds the data, and that the change will "significantly reduce the number of taxpayers" among the roughly 14,900 businesses registered. The costings expect it to raise £20 million in 2028-29, falling to £10 million by 2031-32, through better compliance and earlier payment. The consultation excludes rates, stake and prize limits and wider gambling tax reform. Responses go through HMRC's online form or to mgd.consultation@hmrc.gov.uk.

No other gambling duty rate changed. The only other measure freezes Gaming Duty's Gross Gaming Yield bands for 2027-28. The Budget document announces no change to Remote Gaming Duty, at 40% since April, to General Betting Duty, whose remote betting rate still rises to 25% in April 2027 under the 2025 Budget, or to Lottery Duty or the statutory levy. Bingo Duty was abolished on 1 April 2026.

The Industry Calls It Damaging

BGC chief executive Grainne Hurst said "the Chancellor has ignored repeated warnings about the consequences" and that higher taxes "will make the illegal gambling market more attractive to customers". The BGC said that at 25%, EY projects almost 9,000 job losses and almost 1,000 betting shops and casinos closing or at serious risk; the EY work is not published. Bacta, which represents arcade and AGC operators, published an open letter from about 120 family-run businesses on 26 October asking the Treasury to keep MGD at 20%.

The MPs Got Their Category B Rate at a Lower Price

The 90 Labour MPs' letter asked for a higher rate on Category B machines, cited a Social Market Foundation estimate that 40% could raise £275 million to £458 million a year, and promised pubs would be untouched. By drawing the line at £1 and £100, Healey has delivered that design without naming a category: every B machine moves up, the C and D machines in pubs and seaside arcades do not. At £130 million a year the yield sits below the bottom of the SMF range, so campaigners got the structure and operators got five points rather than a doubling.

AGCs Take a Triple Hit

Betting shops and casinos face the duty rise alone. AGCs also lose rates relief and face a planning consultation aimed at their clustering. The Budget names AGCs as where the targeted machines are "commonly found", and the high street strategy treats them as a problem to manage, which makes the duty part of a policy on where AGCs operate, not only a revenue measure.

Treasury and Industry Disagree on Where the Lost Play Goes

The costing assumes a quarter of the stakes lost from machines moves to taxed online gaming; the BGC argues play will drift to unlicensed sites that pay no UK tax. The Treasury's figure is a stated modelling assumption and EY's numbers are unpublished, so neither claim can be tested yet. Remote Gaming Duty receipts after April's 40% rate are the nearest British test; machine receipts after April 2027 will be the next.

Healey has taken the narrower option of a five-point rise aimed at Category B machines and AGCs, with collection moving to suppliers a year later. Whether it raises £130 million a year or costs the jobs the BGC predicts will be visible in HMRC's receipts by 2028.