UK Budget 2026: gambling tax rise may intensify pressure on operators

In his Budget statement, Chancellor John Healey announced that the MGD rate applying to machine games with stakes of more than £1 per play will increase from 20% to 25% from April 2027. The government said the lower rate applying to machines with stakes of £1 or less will remain unchanged, protecting pubs and seaside arcades from the increase.

MGD is charged on the profits generated from gaming machines. The Budget measure targets higher-stakes machine games, typically found in betting shops and adult gaming centres.

Bryn Reynolds, tax expert at Pinsent Masons, said: “The increase to 25%, while lower than anticipated by many in the industry, will still intensify existing pressure facing gambling operators as they contend with rising costs and taxation.”

He said: “Although the measure is designed to raise additional revenue, higher duty will make some machines and betting shops increasingly difficult to operate profitably, potentially accelerating decisions to reduce machine numbers or close less profitable locations.”

The government said the increase in MGD will help fund its wider package of support for high street businesses, including business rates measures announced in the Budget. Treasury estimates suggest the change will raise additional revenue from 2027-28 onwards.

The Budget also confirmed that responsibility for accounting for and paying MGD will transfer from machine operators to machine suppliers from April 2028, a change the government said will simplify the administration of the tax.

“The chancellor has committed to a balancing act,” said Reynolds.

“Whilst he may raise more from the sector in the short term, there is still a risk of longer-term consequences for the wider tax base if shops close.”