UK Chancellor Could Increase Machine Games Duty in October Budget

UK Chancellor John Healey is reportedly considering increasing machine games duty (MGD) in the Autumn Budget in October, in what would be the latest additional tax burden for the gambling industry.

According to a report from The Times, the Treasury is producing models on how much money could be generated from different rates of increase to MGD.

The additional tax revenue could be used to fund increased spending on defence and measures to ease the cost of living announced by Prime Minister Andy Burnham.

SMF’s recommendation

In June, cross-party think tank the Social Markets Foundation called for MGD on Category B machines in the UK to be raised to 40% of net takings, which would be significantly higher than rates which are currently at a maximum of 25%.

The SMF wants a tax rate to encompass all Category B machines, arguing the government needs to raise revenue, and that more harmful types of gambling should lead to higher rates of tax.

The SMF’s basis for this is that, according to the Gambling Survey for Great Britain covering 2023, one in four (27%) casino game users on machines gambles at risky or harmful levels - the highest of any major category – and that 17% of fruit and slot machine users class as risky, compared to the gambling average of 4.5%.

Another tax burden?

In last year’s Autumn Budget, which was pushed back to November, then Chancellor Rachel Reeves announced increases to remote gaming duty (RGD), paid on online casino bets, and general betting duty (GBD), paid on online sports bets. RGD went up from 21% of gross gambling yield (GGY) to 40%, with the change coming into effect in April. From April 2027, GBD will rise from 15% of GGY to 25%; bets on horseracing will be exempt from this.

Burnham taking over as Prime Minister in July does not appear to be leading to respite.  Burnham recently caused controversy by grouping betting shops with vaping shops as “dodgy businesses”.

In August, the government announced plans to revoke the “aim to permit” rule stipulated in the Gambling Act 2005, which would mean local councils would have greater power to prevent gambling venues from opening.

One government source is quoted by the Times as saying: “Andy hates adult gaming centres. But, like all politicians, he loves bingo halls and pubs. They would probably need carve-outs if they do go after machine games duty.” This year’s Autumn Budget will be announced on Wednesday, 28 October.

How MGD works

In the current system, the duty operators pay on gaming machines varies dependent on the cost of play. For dutiable machine games with a maximum cost of play of 20p and a maximum prize of £10, the tax rate in the 2026/27 year is set at 5%.

The rate goes up to 20% for machines which are not Type 1 machines but where the cost to play cannot exceed £5. When the cost of play can exceed £5, the rate goes up to 25%.

There are also different variations of Category B machines. Category B1 machines cover games with a maximum stake of £2 and a maximum prize of £4,000, while Category B2 machines cover machines with a maximum stake of £100 and a maximum prize of £500.

Meanwhile, Category B3 machines have a maximum stake of £2 and a maximum prize of £500, and the split for Category B4 machines is £1 and £500.