Chancellor John Healey is reportedly considering a higher tax rate on slot machines as the UK government assesses ways to raise additional revenue ahead of the October Budget.
Treasury officials are examining how much money different increases to Machine Games Duty could generate. The duty applies to takings from machines offering cash prizes, including slot, fruit and quiz machines operating on eligible premises.
The reported review comes ahead of the October 28 Budget, when the government faces pressure to raise billions of pounds through tax increases or spending reductions. The additional funds would help cover cost-of-living measures and increased defence spending.
Machine Games Duty does not apply to machines where the prize value falls below the cost of playing. Takings from charity events, tournaments and lottery machines are also excluded, as are machines intended for domestic use. Gambling businesses paying Machine Games Duty receive a corresponding VAT exemption on machine-game takings.
Treasury Reviews Potential Machine Tax Changes
The latest discussions follow proposals earlier this year from the Social Market Foundation to increase the tax rate on Category B machines from 20% to 40%. These machines allow a maximum stake of £2 every 2.5 seconds.
A government source told The Times: “Increases in gambling taxes are definitely on the table again.”
The same source said: “Andy hates adult gaming centres,” adding: “But, like all politicians, he loves bingo halls and pubs. They would probably need carve-outs if they do go after machine games duty.”
The comments highlight the potential impact of any measure on different parts of the retail gambling sector. Adult Gaming Centres, commonly known as AGCs, have received particular attention from Prime Minister Andy Burnham. Recent proposals have included plans to scrap “aim-to-permit” licensing.
Former chancellor Rachel Reeves reportedly examined an increase in slot machine taxation during her time in office. She ultimately opted for higher taxes on online gambling.
The Treasury has not confirmed whether Machine Games Duty will increase. A Treasury spokesperson told The Times: “The chancellor is fully focused on his priorities, to boost business, help with the cost of living and support people in every postcode. As has always been the case, the chancellor will set out decisions at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”
Betting Shops Warn of Further Closures
The prospect of higher machine taxation has drawn opposition from the Betting and Gaming Council, which represents businesses across the gambling industry.
A BGC spokesperson said: “We fundamentally oppose any increase in Machine Games Duty. It would put further pressure on betting shops, casinos and other venues, cost jobs and investment, weaken high streets and benefit the growing illegal gambling market.
“By the end of 2026, more than 600 betting shops will have closed and 5,000 jobs will have been lost since the last year’s Budget following increases in Remote Gaming Duty. Doubling tax on a land-based product would lead to more closures, further job losses and damage to the wider ecosystem that supports British racing.”
Remote Gaming Duty increased to 40% for digital casino gambling from April. Industry representatives have linked betting shop closures to higher online gambling taxation, while also pointing to increased energy costs and the rise in national insurance.
Retail betting has faced additional long-term pressure from customers moving toward online gambling. That shift accelerated during the Covid pandemic and has continued to affect the traditional betting shop model.