UK to raise tax on higher-stakes gaming machines from 20% to 25% in 2027
Key Facts
The UK budget approved an increase in the gaming machine tax from 20% to 25% from 1 April 2027, covering machines with stakes above £1 or prizes above £100, according to the UK Treasury. The decision comes as Rank Group recorded growth in like-for-like net gaming revenue in the first quarter of its 2026/27 financial year. That revenue rose 5% to £216.1 million in the three months ended 30 September 2026. The company's gaming machine revenue also grew 14% in the same quarter. The decision brings a growing business within the scope of the higher tax, with the new rate taking effect in April 2027.
The increase will not cover all gaming machines; the Treasury decision defines the affected category by the maximum stake or prize. The tax rate on these machines will rise from 20% to 25%, with the change tied to the announced start date. The ministry said the higher tax on higher-stakes machines is intended to help fund a freeze on real-terms business rates for retail, hospitality and leisure properties. The finance minister explained the approach: "To fund this support for our high streets, I am raising taxes on gambling by increasing the gaming machine tax from 20% to 25% for higher-stakes machines." The change is therefore framed as a way to fund support for businesses associated with these properties.
The new tax comes against a mixed operating performance across Rank's main businesses. In the first quarter ended 30 September, like-for-like revenue at Grosvenor rose 6%, while Mecca revenue was unchanged, with a change of 0%. The group's like-for-like net gaming revenue was £216.1 million, up 5% year on year. Gaming machines were the fastest-growing product, with revenue up 14%. This means that part of the business that grew in the first quarter will fall into the higher-rate categories when the tax takes effect, according to the thresholds set by the ministry.
Rank has previously warned that a tax increase could affect the viability of its venues. In its annual results, the company said the existing rate was 20% and that any further increase "would impact the viability of Grosvenor and Mecca venues, and would lead to a reduction in tax revenues over 12 months." In the financial year ended 30 June 2026, the group's like-for-like gaming revenue grew 6% to £834.1 million, while underlying operating profit rose 21% to £78.6 million. Those results put the company's warning about viability alongside the revenue and profit growth recorded in the previous year. The annual results did not provide a numerical estimate of the increase's cost to the company.
Shares in gambling companies rose after the budget announcement on 28 October, contrary to what the first draft's wording suggested about an immediate fall in the stock. Rank shares were up 8.1% at 13:55 UK time, alongside gains of 5.4% for Entain and 3.8% for Evoke. Sharecast reported that the market was relieved the increase came in below the 40% level discussed in speculation. The report also cited JPMorgan as saying the announcement was less severe than investors had feared. The subsequent move does not establish that the stock fell 3% in direct reaction to the announcement.
The government plans to consult on transferring responsibility for paying the tax on some machines to their suppliers, with the consultation closing on 20 January 2027. The change in responsibility will begin on 1 April 2028 for certain supplier-owned machines under profit-sharing arrangements. This follows the new tax rate taking effect on 1 April 2027, placing the proposed change in responsibility at a later stage. The change will cover machines included in the specified arrangements, according to the Treasury. Rank is due to report its next results on 28 January 2027, giving investors an opportunity to track the company's guidance on the tax's impact and mitigation measures for operating profit expectations.