UK Raises Tax on Higher-Stakes Gaming Machines to 25% From April 2027

Key Facts

The UK government’s 2026 budget raises the tax on gaming machine games from 20% to 25% from 1 April 2027, but the increase applies only to machines whose stakes or prizes exceed specified thresholds. The Treasury says the new rate covers machines with a maximum charge per play above £1 or a maximum prize above £100. Machines that do not exceed those limits remain subject to the standard 20% rate. The government said, "Revenue from this measure will help fund a freeze in business rates for properties in the retail, hospitality and leisure sectors." The decision makes the stake and prize thresholds, rather than simply operating an electronic machine, the determining factor for the new tax.

The increase is part of a broader restructuring of gaming machine tax bands. Before the change, the higher 25% rate applied to machines with a charge per play above £5. The standard 20% rate applied to machines with a charge per play of between 21 pence and £5, while the lower rate was 5% for machines with a charge per play of no more than 20 pence. Under the new thresholds, some machines previously in the standard band move to the higher band if the charge per play exceeds £1 or the prize exceeds £100. Machines that remain below both thresholds keep the standard rate. The Treasury said retaining the current rate for lower-stakes machines is intended to protect pubs and arcades in coastal areas.

The budget forecasts that the tax will raise Treasury revenue by £135 million in the 2027/28 fiscal year and £150 million in 2028/29. The government links the proceeds to funding a real-terms freeze in business rates for the retail, hospitality and leisure sectors. In England, it said half of the properties in these sectors will pay no business rates, and about 110,000 properties will see their bills fall next year. This places the new tax within a budget that seeks to fund support for businesses with additional revenue from gambling activity. In its 2025 budget, the government announced an increase in remote gaming duty from 21% to 40% from 1 April 2026. It also decided to apply a 25% rate to remote betting from 1 April 2027, while exempting bets on British horse racing, which remain at 15%.

Data from Rank Group highlight the importance of gaming machines to operators’ business, with revenue from the machines rising 14% in the first quarter of its 2026/27 financial year. The group’s like-for-like net gaming revenue was £216.1 million in the quarter ended 30 September 2026, up 5% year on year. The group’s chief executive said before the budget announcement that any increase in gaming machine tax would raise costs, potentially undermining the viability of venues and leading to closures, job losses, lower tax revenues and a halt to investment. The company did not quantify the new decision’s impact on its earnings or margins in its financial update. In estimates published ahead of the budget, a study commissioned by the Betting and Gaming Council said doubling the tax could lead to the closure of up to 1,470 betting shops and the loss of 15,900 jobs across the sector.

Entain, owner of Ladbrokes, said it expects additional costs of £25 million for its retail business in the UK and Ireland following changes to gambling taxes. Reuters reported that the company’s shares rose 5% on 28 October 2026, despite its disappointment with the tax increase. The agency attributed the share rise to the increases being smaller than expected. Entain’s estimate covers the impact of tax changes on its business in the UK and Ireland, while Rank did not provide a comparable estimate of the impact of the machine tax on its results. The market response reported by Reuters therefore showed an increase in Entain’s share price, while company disclosures pointed to differing levels of exposure and reported costs.

Alongside the rate increase, responsibility for paying gaming machine tax in some operating arrangements will shift to machine suppliers from 1 April 2028. The change covers supplier-owned machines operated under profit-sharing arrangements, while venue operators remain responsible when they own the machines outright or use fixed-rent or lease arrangements and control the revenue. The Treasury has opened a 12-week consultation on implementing the tax-liability reform. The consultation is due to close on 20 January 2027. Rank said it will announce its interim results for the six months ended 31 December 2026 on 28 January 2027.