John Healey ups gambling machine tax to pay for UK high street relief

John Healey, the UK Chancellor of the Exchequer, has confirmed that taxes on the most commonly used gaming machines will increase by five percentage points in the 2026 budget. Addressing the Commons, Healey revealed major changes to business rates. This falls in line with a long-held policy of Prime Minister Andy Burnham’s government of boosting British high streets on a “budget of stability and economic sense”. The threshold for small business rate relief for retail hospitality and leisure businesses is being increased from £12,000 to £18,000, with some 70,000 businesses excluded altogether. This serves as an extension to the 20% cut in business rates announced when PM Burnham took office. The package of high street discounts will be supplemented by increasing the Machine Games Duty (MGD), paid on Category B slot machines in betting shops and adult gaming centres (AGCs), from 20% to 25%. “To pay for this support for our high streets, 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,” Healey said. Healey has stated his Budget makes good on his earlier claims of being “a chancellor who champions small British firms that give character to our communities”. Budget puts spotlight on AGCs It is worth noting that Healey’s speech specifically singled out adult gaming centres (AGCs) and vape shops, but not betting shops. It has not been made clear yet whether betting shops will also benefit from the rate relief cut. This may give some relief to the retail sports betting sector as, at least for now, it appears that it is not being lumped in with the more controversial AGCs, though the MGD rate will still affect its finances. “I will carve out adult gaming centers and vape shops from business rates reliefs, and extend the business rates transitional relief supplement for another two years, and I will strengthen the requirements for online marketplaces so that sellers cannot avoid paying VAT when they sell online,” Healey added. The tax hike has been widely expected by the British gambling industry, though it is still a way off the much more burdensome doubling of rates being called for by the Social Market Foundation (SMF) think tank and former Prime Minister Gordon Brown. It does, however, add further pressure in particular to omnichannel operators such as Paddy Power, Betfred and William Hill, which are already mitigating the impacts of previously-announced raises in Remote Gaming Duty (RGD) and General Betting Duty (GBD). Healey softens games duty blow Burnham’s government, with Healey heading up HM Treasury, has allocated some £1.42trn to day-to-day government spend and public infrastructure projects, including defence spending. The Chancellor underscored caution, aware of global impacts on the horizon. Headroom in the budget would be “reserved to absorb the impact of the Iran war, to protect the economy and to protect family finances”. Despite calls to go further with gaming taxes to support the government’s plans and projects, Healey has made just one change to the MGD, which as stated above operators must pay on any revenue made from Category B gaming machines. The standard rate of MGD applied to revenue from these machines – the most common form of slot machine found in betting shops, amusement arcades and adult gaming centres (AGCs) throughout the UK – has risen from 20% to 25%. This is paid on Category B gaming machines, the most common slot machine found in betting shops, amusement arcades, and adult gaming centres (AGCs). There are five different types of Category B gaming machines in the UK. Four of these machine types, B4, B3A, B3 and B2 machines, have stakes capped at £2, and are subject to the standard rate of MGD, now set at 25% by Healey. The remaining type of Category B gaming machine is the B1, which has maximum stakes of £5 while the number of machines allowed in a venue is capped at 150 in large casinos and at a ratio of 5:1 against all other categories in other venues. These machines, along with the Category A machines which are currently not permitted in any venue, are taxed at the higher rate of MGD, which remains at 25% under Healey’s 2026 budget. The remaining categories are Category C and D. These are the low stakes ‘penny slots’ found in seaside towns and the fruit machines seen in many pubs throughout the UK, with a maximum stake of £1, and subject to the lower rate of MGD of 15%. As Healey mentioned in his speech, the government is not concerned about the low stakes slots found in pubs and seaside towns. Reinvigorating Britain’s pub sector, which has declined at an average of one pub closing per day, has been a big talking point for this government. Betting firms craft own budgets Healey has also confirmed that the National Living Wage will increase by 3.9% from £12.71 to £13.20 an hour over 21s. The National Minimum Wage for 18-2- year olds, currently set at £10.72 per hour, will also increase by 3.9%. As with other government policies, this is one goal in mind – alleviating the pressure felt by many working people and families feeling the bite of inflation and costs of living, particularly energy and fuel prices. It’s hard, nearly impossible, to argue that increasing the minimum wage is a bad policy. According to House of Commons data, more than 16% of the UK’s adult population lives on a “relative low income”. Increasing the minimum wage is undeniably positive for millions of working Britons. Summarising the Burnham government’s budget, Healy remarked that “finally there is breathing space now and fresh hope for the future, delivered to the British people by this Labor government”. It has to be said, however, that this will lead to more budgeting by businesses as they make adjustments to employee monthly paychecks. For betting companies, which employ large numbers of minimum wage staff across shops and call/support centres, this is a new factor to take into account when crafting budgets. The increase in MGD also comes after the increases in Remote Gaming Duty (RGD) from 21% to 40% in April 2026, and ahead of the increase in General Betting Duty (GBD) from 15% to 25% next April – with retail betting excluded. Concerns that operators may account for increased costs by cutting headcounts remain widespread, and these concerns are only likely to be exacerbated after Labour’s latest announcement. For the UK betting industry, I would expect any further significant tax increase to accelerate those conversations, particularly among operators with substantial retail exposure,” Caroline Butler, Director of recruitment advisory firm TalentThrive, told SBC News. I anticipate a more selective hiring market, rather than recruitment stopping altogether. Operators will still need people in business critical functions, particularly compliance, risk, technology, payments and commercial roles directly supporting profitability and operational resilience. Coauthored with Ted Menmuir, Viktor Kayed and Patrick Killeen