UK Chancellor John Healey is reportedly weighing a significant increase in slot machine taxes as a tough October budget approaches.
Treasury officials are currently modelling how much revenue could be generated from various increases to Machine Games Duty, according to a report by The Times.
The discussions follow proposals from the Social Market Foundation earlier this year to double the tax on Category B machines from 20% to 40%.
Category B machines feature a maximum stake of £2 every 2.5 seconds and are commonly found in betting shops and casinos across the country.
Healey faces a demanding budget on 28 October, where he must raise billions of pounds through tax rises or spending cuts to fund cost-of-living measures and increased defence spending.
“Increases in gambling taxes are definitely on the table again,” one government source told The Times, signalling that the gambling industry remains firmly in the Treasury’s sights.
The Betting and Gaming Council has strongly opposed the prospect of a doubling of Machine Games Duty, warning of widespread consequences for operators and high streets.
“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,” a BGC spokesperson said.
The BGC spokesperson added: “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.”
The trade body further warned that “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.”
Industry representatives have previously linked betting shop closures to an increased 40% Remote Gaming Duty rate that applied to digital casino products from April this year.
Higher energy costs and the rise in national insurance contributions have compounded pressures on retail betting operators already facing long-term migration of customers toward online gambling.
One significant concern raised by industry figures is that higher taxes could push consumers toward the black market, an issue the BGC has consistently highlighted in its communications with government.
There is also a risk that mid-tier operators could be wiped out entirely by further tax rises, potentially ceding market share to larger companies better equipped to absorb the additional burden.
Machine Games Duty applies to takings from machines offering cash prizes, including slot, fruit, and quiz machines operating on eligible premises, though machines where prize value falls below the cost of play are excluded.
Gambling businesses that pay Machine Games Duty currently receive a corresponding VAT exemption on machine-game takings, a relief that may become increasingly important if duty rates are raised substantially.
