UK Think Tank Proposes Sharp Rise in Machine Games Duty on Category B Slots as Industry Warns of Venue and Job Losses
The Social Market Foundation (SMF) has called for Machine Games Duty (MGD) on Category B slot machines to rise to 40 per cent, aligning it with the new rate on online slots. The proposal comes less than three months after the Remote Gaming Duty increased from 21 to 40 per cent in April.
This latest push targets land-based gaming machines in betting shops, arcades and bingo halls. It arrives after the Autumn Budget spared high street betting shops, horse racing bets and bingo from further tax rises while hiking online sports wagers from 15 to 25 per cent effective April 2027. For executives operating in the UK, the signal is clear: land-based assets that escaped the last round now sit squarely in the fiscal crosshairs.
The Mechanics of the Proposed Tax Increase
Category B devices, which can pay out up to £500, currently face a tiered MGD of 5 per cent on stakes up to 20p, 20 per cent on stakes up to £5, and 25 per cent on stakes above £5. The SMF wants a flat 40 per cent rate on these machines while leaving Category C machines at 20 per cent and lower-stake devices at 5 per cent.
The think tank estimates the change would generate between £275m and £458m a year in extra tax revenue. It argues this would shift the burden onto riskier electronic gaming machines while protecting the hospitality industry.
Gideon Salutin, the SMF’s Chief Economist, stated: “Our modelling shows that raising Machine Games Duty is one of the few tax rises that would actually improve the public finances twice over – once through higher receipts from the machines themselves, and again as spending shifts to sectors that generate more jobs and more tax revenue per pound.”
The structure insulates hospitality entirely and reflects public support, with a Survation poll of 2,047 adults finding 43 per cent backed higher taxation on these machines versus 11 per cent who favoured cuts.
Disproportionate Impact on Deprived Areas
The SMF highlights that Category B machines are disproportionately located in deprived areas. It reports that 47 per cent of the UK’s 1,400 adult gaming centres sit in the bottom 20 per cent of neighbourhoods by wealth.
This framing ties the tax rise to harm reduction and regional equity. Yet for operators it raises immediate operational questions about machine profitability, venue viability and customer migration patterns once margins compress.
From my perspective after decades observing the evolution of gaming regulation, such targeted tax measures often overlook the broader economic role these venues play in local communities. They are not simply gambling outlets but community anchors that support footfall on high streets.
Industry Pushback and the Risk of Illegal Market Growth
The Betting and Gaming Council (BGC) responded sharply. It stated: “We fundamentally disagree with any proposal for an increase in Machine Games Duty. Betting shops, bingo clubs and casinos support local jobs, help keep high streets alive and provide valued community spaces for millions of adults.”
The BGC warned that a further increase “would put venues and jobs at risk while driving more customers towards the growing illegal gambling market.” It called for tax policy to remain evidence-led and proportionate given the pressures already facing the regulated sector.
This counterargument carries weight. After the Remote Gaming Duty jump and the forthcoming online sports duty rise, many operators already operate with thinner margins. A land-based tax shock could accelerate closures, particularly in lower-income postcodes where the SMF itself notes concentration.
One clear risk is unintended substitution. If regulated venues become uneconomic, players may shift to unlicensed operators who face no Machine Games Duty, no compliance costs and no harm-minimisation overhead. That outcome would undermine the very public-finance and harm-reduction goals the SMF cites.
Strategic Implications for UK Land-Based Operators
Executives must now model multiple scenarios ahead of any Autumn Statement or Spring Budget response. The convergence of higher remote taxes, proposed machine-duty hikes and persistent cost inflation creates a structural shift in the UK gaming economics.
Client-partners with exposure to betting shops, adult gaming centres and bingo halls should review machine mix, stake profiles and non-gaming revenue streams. Those already diversified across online and land-based channels may be better positioned, but pure-play terrestrial businesses face the sharpest pressure.
The SMF’s own data on public support and deprived-area concentration will likely feature in political debate. Operators need to bring forward their own evidence on employment, high-street vitality and the scale of the illegal market to shape the eventual policy outcome.
The Bottom Line
The SMF proposal illustrates how quickly the post-Budget tax conversation has moved from online to land-based. While the modelling projects £275m to £458m in new revenue, the BGC’s warning about venues, jobs and illegal migration highlights real operational and competitive risks. UK executives should treat this as a prompt to stress-test their land-based portfolios, engage with trade bodies on evidence-led alternatives, and prepare for further fiscal pressure in 2027 and beyond. The sector’s ability to demonstrate proportionate contribution to local economies may prove decisive in the months ahead.
