HM Treasury expects £655m over five years from higher Machine Games Duty on higher-stake machines

HM Treasury has set out its reasoning for raising Machine Games Duty (MGD) and estimates the change will bring in £655m over five years. The assessment was released after Chancellor John Healey announced the increase in the Autumn Budget on 28 October.

From 1 April 2027, machines that accept stakes above £1 or pay prizes above £100 will fall under a 25% rate, up from 20%. The change mainly affects Category B machines. Category C and D machines, with £1 stakes and prizes below £100, stay at 20%. Healey said the revenue would help fund relief for high street businesses, including a higher business rates threshold of £18,000, up from £12,000, for retail, hospitality and leisure venues. Arcades, betting shops and vape shops are excluded from those exemptions.

The Treasury says the policy follows three principles: a lower targeted risk on gambling, a single tax threshold for gaming machines, and collection through an existing system. It argues that higher stakes and prizes are linked to greater gambling harm. However, the document does not quantify any reduction in harm expected from the measure, and it acknowledges uncertainty over customer behaviour. Operators might change player returns, and some customers could gamble less or switch products.

The forecast, certified by the Office for Budget Responsibility, shows extra receipts of £135m in 2027/28 and £130m a year in each of the following four financial years. HMRC estimates that about 5,100 operators across 12,400 active premises will be affected. For machines moving from 20% to 25%, duty liability rises by 25% on unchanged net takings. The government does not expect significant macroeconomic effects.

The Betting and Gaming Council disputes this. Citing EY modelling, it says almost 9,000 jobs could be lost and nearly 1,000 betting shops and casinos could close or face serious risk of closure at a 25% rate. It also warns that the higher duty could weaken casino investment and make illegal operators more attractive. Chief executive Grainne Hurst called the decision deeply damaging for workers, businesses and local communities.

On administration, businesses will keep using existing MGD registration, quarterly returns and payment arrangements. HMRC expects only one-off costs for updating systems and categorising machines. It plans to assess revenue effects after two years of monitoring data, though this is not a commitment to a full review of employment or business impacts. The Treasury also retains flexibility to move stake and prize thresholds up or down and makes no pledge to freeze gambling duties.