UK Arcade Operators Say a 40% Machine Tax Would Close Venues, With a New PM Already Raising Their Rates

Britain's land-based gaming sector escaped the last budget and is now being lined up for the next one. A survey of Bacta members, the trade body for the gaming hall sector, found that every single respondent expects a significant rise in Machine Games Duty to hurt their business, with 90% describing the impact as "severe negative" and the remaining 10% as moderately negative.

The proposal driving the alarm came from the Social Market Foundation, which last month recommended lifting MGD on Category B slot machines to 40%, matching the Remote Gaming Duty imposed on online rivals in April. Category B devices pay out up to £500 and are the most common electronic gaming machine in betting shops, arcades and bingo halls. They currently sit on a tiered rate: 5% on stakes up to 20p, 20% on stakes up to £5, and 25% above £5. The SMF would leave Category C machines in pubs at 20% and low-stake devices at 5%, arguing this shifts the burden onto riskier machines while protecting hospitality.

Bacta's Pulse survey, conducted before Andy Burnham was confirmed as prime minister, puts numbers on what operators say would follow. Asked to name the biggest challenge from an MGD increase, 67% chose remaining profitable, 23% maintaining staff levels and 10% investing in new machines and refurbishment. On investment, 87% said a downturn would be "very likely" and 3% likely, with 10% undecided. The most cited tangible consequences were closure of some adult gaming centres (43%), a fall in profitability (30%) and job losses (27%). One response was unanimous: 100% said Westminster policymakers do not understand the sector.

Bacta president Joseph Cullis tied the argument to the high street rather than to operator margins. "Hiking taxes on gaming machines will only serve to damage high streets, seaside towns, working men's clubs, pubs, bingo clubs, manufacturers and the wider supply chain," he said. "If the licensed, regulated sector retracts it will be the illegal unregulated sector that benefits." He noted that seaside piers and amusement arcades rely on gaming income to stay viable year-round, and listed the existing load: business rates, irrecoverable VAT, the statutory levy, rising wage costs, higher National Insurance, energy bills, licence fees and compliance.

The political ground has already shifted

The sector's exposure changed before any MGD decision. Burnham became prime minister on July 20 and within days announced a 20% cut to business rates for pubs, clubs and live music venues in England from April 2027, funded partly by reducing rate relief for vape shops and gambling arcades. "Adult gaming centres on high streets can often bring real harm to communities," he said, a formulation that puts the sector on the paying side of a £100 million-a-year measure. Bookmakers and adult gaming centres had already been excluded from the 15% Retail, Hospitality and Leisure relief applied from April 2026.

The tax backdrop for the online side moved first. Remote Gaming Duty rose from 25% to 40% on April 1, 2026, and General Betting Duty goes from 15% to 25% in April 2027. Land-based was left untouched in the last budget: no change to rates on high street betting shop wagers or machines, horse racing bets made entirely exempt from the increase, and the 10% bingo tax scrapped. The SMF, which pushed for those online rises before the autumn budget, is now arguing the same logic should reach the machines.

Pressure is building from a second direction. A House of Lords debate on August 1 heard renewed calls for reform aimed at gambling harm among young people, with peers arguing that the 2005 Gambling Act does not reflect the speed and personalisation of online products, and that loot boxes, social casino games and esports betting familiarise young people with gambling mechanics while sitting outside gambling regulation entirely. Peers pressed for stricter age verification and affordability checks, tougher rules on game design and marketing aimed at younger users, and licence conditions requiring operators to share data with the Gambling Commission and researchers and to show how they identify and act on risky behavior. Gambling minister Baroness Twycross rejected amendments to the Sports Events Bill last month that would have banned gambling sponsorship and advertising in British sport, but the Lords are unlikely to drop it, and Burnham's record on reform suggests a more receptive Number 10 than the sector had before.

For operators and affiliates, the direction of travel in the UK is now consistent across every instrument at once: licence fees rising, settlement money redirected to the Treasury rather than the sector, record self-exclusion volumes feeding the harm case, and duty rises already legislated online with land-based next in line. Cullis's black-market argument is the industry's main counter and the one the Commission itself takes seriously given the scale of unlicensed operators targeting British players. No MGD change has been announced.