MGD hike to 25% could spare UK gambling from the brunt of feared tax shock

A reported Budget proposal points to a softer tax increase than many betting and gaming businesses had feared.

Key takeaways:

• Reports indicate Machine Games Duty could increase from 20 per cent to 25 per cent.
• Campaigners and at least 90 Labour MPs had called for MGD to double to 40 per cent.
• Gordon Brown has publicly supported a higher MGD rate to raise government revenue.
• The retail gaming sector has faced uncertainty over potential restrictions on betting shops and adult gaming centres.
• A lower-than-feared increase would be welcomed by operators concerned about costs, closures and investment.

The UK government is expected to raise Machine Games Duty on category B gaming machines from 20 per cent to 25 per cent in the upcoming Autumn Budget, according to reports. While the move would increase costs for land-based gambling businesses, it falls well short of the 40 per cent rate proposed by gambling reform campaigners and supported by a group of Labour MPs. As a result, many operators are likely to view the measure as a more manageable outcome than the industry had feared.

UK.- With just a week to go until the unveiling of the UK Autumn Budget, reports now suggest that Chancellor John Healey is preparing to increase Machine Games Duty (MGD) on category B gaming machines by 5 percentage points. According to unnamed sources cited by The Times, the increases will be significantly lower than the doubling of the current duty proposed by the Social Market Foundation (SMF) in June and supported by at least 90 Labour MPs.

If confirmed when the Budget is unveiled on October 29, the standard MGD rate on category B machines would rise from 20 per cent to 25 per cent. While that would still represent a tax increase for the land-based gambling and entertainment sector, many stakeholders are likely to view it as a considerably better outcome than the 40 per cent rate some campaigners and politicians have advocated in recent months.

The prospect of a much steeper increase has weighed heavily on the SMF published a report calling for MGD to be doubled to 40 per cent. The proposal subsequently gained support among gambling reform advocates. Most recently, 90 Labour MPs backed a letter from Labour MP Alex Ballinger that urged the government to adopt the SMF’s recommendation. Former Prime Minister Gordon Brown has also publicly called for a higher MGD rate, arguing that additional tax revenues could help fund measures aimed at addressing rising living costs.

That the final announcement should see a lower rate than that proposed would not be surprising as it would follow the pattern of the build-up to last year’s Autumn Budget. Brown and the SMF had called for Remote Gaming Duty (RGD) to be increased to 50 per cent and General Betting Duty (GBD) to 25 per cent. In the end, RGD was hiked to 40 per cent from April 2026 and GBD will rise to 25 per cent from April 2027. Retail betting and horse betting were exempted from the rise.

The UK retail gaming sector also faced uncertainty due to Prime Minister Andy Burnham’s stated opposition to Adult Gaming Centres (AGCs), which, alongside betting shops and bingo halls, rely heavily on gaming machine revenues. Burnham has expressed support for ending the ‘aim to permit’ rule, giving local authorities greater powers to restrict the number of betting shops operating within their areas.

FAQs

What is Machine Games Duty (MGD)?
Machine Games Duty is a UK tax applied to the gross profits generated by gaming machines, including those found in betting shops, bingo halls and adult gaming centres.

How much is MGD expected to increase?
Reports suggest the standard rate on category B gaming machines will rise from 20 per cent to 25 per cent when the Autumn Budget is announced.

What are Category B slot machines?
Category B devices can pay out up to £500. They are the most common type of electronic gaming machine in UK betting shops, arcades and bingo halls and offer higher winnings than Category C machines, which are typically found in pubs.

How much is MGD currently?
On Category B machines, operators currently pay the duty at a tiered rate of just 5 per cent on stakes up to 20p, 20 per cent on stakes up to £5, and 25 per cent on stakes above £5. Category C machines, typically found in pubs, pay MGD at 20 per cent and lower-stake devices at 5 per cent