UK arcades face political and fiscal pressure as budget nears, with higher machine games duty under review

Adult gaming centres (AGCs), which offer only gaming machines and no sports betting, are becoming a political target in Britain. Many open late and some around the clock, and they have taken over sites left by closing betting shops. According to The Times, the prime minister, Andy Burnham, dislikes them, and the Treasury is reportedly modelling higher machine games duty (MGD) for the budget on 28 October. The Financial Times reports that chancellor John Healey is weighing a rise aimed only at betting shops and AGCs.

The sector is smaller than its political profile suggests. Dan Waugh of Regulus Partners says AGCs account for around 4% of spending in the licensed market, based on Gambling Commission figures. On machines they take about a quarter of licensed spending, against just under half for betting shops in 2024/25. Waugh links the shift to the 2019 cut in the maximum fixed-odds terminal stake to £2, which moved machine spending toward casinos, bingo clubs and AGCs.

A spokesperson for a large UK operator, speaking off the record, said arcades are much cheaper to run. They are classed as hospitality venues for business rates, pay less towards the statutory levy and owe no media-rights fees for racing. They can also open later than bookmakers, which must close by 10pm. Machine allocation rules let operators install large numbers of Category C machines, which in turn allow more Category B terminals.

The Social Market Foundation finds that the most deprived areas have on average six times as many AGCs as the least deprived. Waugh calls much of the hostility to arcades snobbery and notes that Commission data show lower problem gambling rates among arcade machine players than among pub machine players.

Regulation is split between the Gambling Commission and local councils, which issue premises licences and must currently aim to permit compliant applications. The government has introduced Gambling Impact Assessments, and Burnham has said that principle will go. Lord Foster of Bath, who chairs Peers for Gambling Reform, wants councils to have more power to refuse new AGCs and more funding for enforcement. He cites concerns over the 80/20 machine ratio and infill machines. Bookmakers want loopholes on lower taxes closed to level the playing field.

The bigger threat is fiscal. MGD is charged at 20%-25% on most machines and raises about £600 million a year. The Social Market Foundation wants a 40% rate for casinos, arcades, betting shops, bingo halls and members' clubs, but not pubs, which it says could raise up to £458 million.