UK Considers Machine Games Duty Increase Targeting Adult Gaming Centres Ahead of October Budget

UK officials are modelling higher rates of machine games duty ahead of the budget on 28 October. The potential rise, aimed at betting shops and adult gaming centres, comes as Prime Minister Andy Burnham and others view arcades as symbols of high-street decline. Burnham has called betting shops a sign of decaying high streets and likes arcades even less.

The venues capture around 4% of spending on gambling in the licensed market. They account for around a quarter of licensed machine spending against just under half for betting shops in 2024/25, according to reporting by iGaming Business.

Shifting Balance Since Stake Cuts

The tilt began after the 2019 decision to cut the maximum stake on fixed-odds betting terminals to £2. That change pushed machine spending from bookmakers toward arcades, casinos and bingo clubs, particularly as shops closed. Arcades thrive on lower costs: they are classified as hospitality venues for business rates, pay less toward the statutory levy and incur no media-rights fees for racing.

Longer opening hours add to the edge. Arcades can serve late-night customers after pubs close, while betting shops shut by 10pm. Operators flood arcades with Category C machines, which allow more Category B terminals under ratio rules. Dan Waugh of Regulus Partners argues much of the political opposition stems from snobbery. Commission data show lower problem gambling rates for arcade machine players than for those in pubs.

Warnings of Closures and Unintended Consequences

A rise from the current 20%-25% rate to 40% could generate up to £458 million but carries sharp risks. The Social Market Foundation puts the economic cost of machine-gaming harm at £2.33 billion. Entain CEO Stella David warned in a 11 September letter that doubling the standard rate would add around £100 million a year to the cost of its UK shops. EY modelling cited by Entain projects up to 1,470 shop closures, 15,900 lost jobs and a net loss to the Exchequer of about £120 million.

David told analysts on 15 October that 630 betting shops closed industry-wide in the past year before any tax rise. Waugh expects the duty increase to trigger a large number of AGC closures along with bingo clubs, casinos and betting shops. With £1.6 billion already bet through illegal land-based gambling each year and limited enforcement, the black market stands to gain.

The High-Street Reckoning

Reforms that scrap the “aim to permit” test and grant local councils more refusal powers may not offset the fiscal damage if tax disparities remain unaddressed. Stronger-balance-sheet operators may endure, but the net effect could hollow out licensed retail gaming while expanding illicit activity.

Reporting: iGaming Business (iGB)

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