UK Budget raises Machine Games Duty to 25% from April 2027

Gaming machines with stakes over £1 or prizes over £100 will pay 25% Machine Games Duty in the UK from 1 April 2027, up from 20%. Chancellor John Healey announced the change in the Budget on 28 October. The Treasury is keeping the existing rate for lower-stake machines, the kind found in pubs and seaside arcades: 5% for the smallest machines and 20% for the middle band. The Budget documents leave Remote Gaming Duty, the tax on online casino play, at 40%.

Healey told the Commons: "I'm raising taxes on gambling by increasing Machine Games Duty from 20% to 25% for higher stakes machines, whilst protecting pubs and seaside arcades," as reported by next.io.

What actually changes

Machine Games Duty is charged on a venue's net takings from gaming machines, meaning the money played in minus the prizes paid out. It has three bands. HMRC's rate table for 2026-27 shows a 5% band for the smallest machines (up to 20p a play and £10 prizes), a 20% band for machines costing up to £5 a play, and 25% for everything above that.

The Budget does not create a new top rate. It moves the line between the middle band and the top band. From 1 April 2027, the 20% band covers only machines that cost no more than £1 a play and pay a maximum prize of £100. Any machine above either of those limits falls into the 25% band. The Treasury says the higher rate targets machines "commonly found in venues such as adult gaming centres" and describes them as "higher-risk machines, which are more associated with gambling harm".

The government says the money will help pay for a real-terms freeze in business rates for retail, hospitality and leisure properties.

Two more changes for machine venues

• Who pays. From 1 April 2028, the machine supplier, not the venue, will be liable for the duty on supplier-owned machines run under a profit-share arrangement. Venues stay liable where they own the machine outright, or rent or lease it at a fixed fee and control the takings. A 12-week consultation on how this will work is open until 20 January 2027.
• Business rates. From April 2027, adult gaming centres in England lose access to the lower business-rates multipliers for retail, hospitality and leisure properties. Vape shops lose it too.

Table 6.1 of the Budget document puts the two machine duty changes together at £135 million in 2027-28, £150 million in 2028-29 and £145 million a year from 2029-30 to 2031-32. The business-rates change adds £10 million a year.

What it means for online players

For online casino play, the Budget announces no new rate. HMRC's rate table lists Remote Gaming Duty at 40% for both 2026-27 and 2027-28. The 40% rate took effect on 1 April 2026, as announced at Budget 2025; Flutter is now restructuring its UK and Ireland business.

The rate table also shows the duty on remote fixed-odds bets (excluding UK horse racing) at 25% for 2027-28, up from 15%. That rate was announced at Budget 2025, not in this Budget.

The one online duty measure in the Budget is technical. Legislation in the next Finance Bill will clarify how Remote Gaming Duty treats free plays, prizes and tournaments from 1 April 2027. Free plays will be renamed "restricted plays" in the law. As of 28 October, the Budget documents do not say whether this changes how much duty operators pay.

There is a link between the two taxes. In its costing of the machine duty rise, the Treasury assumes operators may pass part of the increase on by lowering the return to player on machines. It expects machine gambling to fall as a result, and about a quarter of the lost machine stakes to move to online gaming.

Reactions

Gideon Salutin, chief economist at the Social Market Foundation think tank, which had called for a much larger rise, said, as reported by next.io, that the government had acknowledged "the higher harm associated with this form of gambling", but called the rise "relatively limited". Before the Budget, Rank Group CEO Richard Harris had told next.io that "if the tax rate on machines goes up, then venues become unviable".

The rise needs legislation in Finance Bill 2026-27 before it applies. Machine venues are also dealing with separate Gambling Commission rules: see the UKGC's Category B machine standards. For the size of the online market the 40% rate now applies to, see Britain's online casino yield for 2025-26. For shop closures on the betting side, see Evoke's Q3 2026 results.