The UK is coming for the machines. Online already pays 40%.

The UK Treasury is modelling options to increase Machine Games Duty ahead of the 28 October budget, according to a report from The Times. Chancellor John Healey is weighing a potential rise in the tax rate applied to category B gaming machines, which currently stands at 20%.

The Social Market Foundation has proposed doubling the duty from 20% to 40%, bringing it in line with the rate already applied to online gaming operators in the UK. The think tank estimates such a move could generate between £275 million and £458 million annually for the Treasury.

The Revenue Assumptions

The upper end of the Social Market Foundation’s revenue projection assumes no behavioural changes from operators or players in response to the tax increase. This £458 million figure represents a best-case scenario for Treasury coffers, though industry observers note that significant tax rises typically prompt strategic adjustments from affected businesses.

The lower estimate of £275 million likely accounts for some degree of market contraction or operational changes as operators respond to the doubled duty rate.

Parity With Online

The proposed increase would create tax parity between land-based gaming machines and online operators, who already face a 40% duty rate in the UK market. This alignment has been a point of discussion in policy circles, with advocates arguing that similar products should face similar tax treatment regardless of distribution channel.

Category B gaming machines are commonly found in betting shops and other licensed premises across the UK, representing a significant revenue stream for both operators and the Treasury under the current 20% duty structure.

Long-Term Jurisdiction Planning

Industry sources note that tax policy changes of this magnitude influence long-term strategic planning for operators. The observation that “the tax you pay in year three picks your next jurisdiction, not the application fee” underscores how ongoing fiscal obligations outweigh initial licensing costs when operators evaluate market attractiveness.

For multi-jurisdictional operators, a doubling of Machine Games Duty could prompt reassessment of UK market prioritisation relative to other regulated territories. While the UK remains one of the world’s most established gambling markets, significant tax increases alter the return-on-investment calculations that drive capital allocation and expansion decisions.

The October budget will reveal whether Chancellor Healey proceeds with the increase and at what level. Treasury officials are understood to be reviewing multiple scenarios as part of the budget preparation process.