The UK government is considering another increase in gambling taxation, with Machine Games Duty (MGD) under review ahead of the October budget. The proposal has raised concern across the betting industry, while British racing faces the prospect of reduced income if further betting shop closures follow.
Treasury officials are assessing the potential revenue from different MGD increases, according to reports. The government must raise billions of pounds through tax measures or spending reductions to cover higher defence expenditure and cost-of-living commitments.
One proposal would increase the tax on Category B gaming machines from 20% to 40%. The Social Market Foundation has estimated that the change could generate between £275 million and £458 million, although separate modelling from Regulus Partners suggests a substantial tax increase could instead accelerate closures across betting shops and adult gaming centres.
Racing Faces Another Threat To Its Funding
Industry modelling cited in the reports indicates that doubling MGD could result in 2,912 betting shops closing. The resulting reduction in betting levy and media-rights payments could cost British racing £70 million.
The Betting and Gaming Council has rejected an increase in MGD. Its spokesperson said: “It would put further pressure on betting shops, casinos and other venues, cost jobs and investment, weaken high streets and benefit the growing illegal gambling market.
“By the end of 2026, more than 600 betting shops will have closed and 5,000 jobs will have been lost since last year’s budget following increases in remote gaming duty. Doubling tax on a land-based product would lead to more closures, further job losses and damage to the wider ecosystem that supports British racing.”
The sector has already faced higher taxes on online gambling, while operators have also cited rising energy costs and national insurance expenses. Betting shops have additionally experienced a longer-term shift in customer activity toward online gambling, a trend that accelerated during the Covid pandemic.
Retail Gambling Already Under Pressure
Recent closures have added to concerns over the high street. Paddy Power plans to shut 100 betting shops before the end of 2026, while Betfred intends to close 132 locations. Evoke, the owner of William Hill, has also announced 270 closures following a strategic review.
Political pressure has increased alongside the industry changes. Prime Minister Andy Burnham has targeted adult gaming centres and supported changes to the “aim-to-permit” licensing approach. Former chancellor Gordon Brown has also called for higher taxes on gaming machines.
A Labour source told The Times: “Andy hates adult gaming centres,” the source said. “But, like all politicians, he loves bingo halls and pubs. They would probably need carve-outs if they do go after machine games duty.”
Healey has declined to comment on individual tax proposals. He said: “If I respond to speculation now that will only fuel more speculation, and it’s quite right – and every chancellor would say – that’s for the budget and I will set out my plans and the future route for government, for this country, at that budget.”
A Treasury spokesman said decisions would be announced at fiscal events rather than through responses to speculation.
Source:
“Government could continue assault on gambling industry with latest proposed tax rise that would cost racing millions”, racingpost.com, September 7, 2026
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