Chancellor John Healey is reportedly weighing a doubling of Machine Games Duty on Category B machines, (in plain english – betting terminals) from 20% to 40%, in the 28 October Budget. That would land on top of April’s Remote Gaming Duty rise to 40% and a Remote Betting Duty increase to 25% due in 2027. On paper, each of these looks like a routine revenue tweak. In practice, together they’re re-sorting the UK gambling market by company size, and the outcome isn’t fewer bets being placed, it’s fewer regulated operators left to take them.
The short version: UK operators aren’t being taxed equally in effect, even where the headline rate is the same for everyone. Flutter and Entain can absorb an estimated £300m to £500m hit to annual earnings through cost discipline and scale. Independent and SME operators generally can’t. What follows is closures, consolidation into the biggest brands, and stake volume drifting to unlicensed offshore books that pay no UK tax at all.
What’s actually being proposed?
The Machines Games Duty (MGD) plan under consideration would double the duty on Category B machines, the £2-stake limit per spin, 2.5-second-cycle limits that anchor adult gaming centres, bingo halls, casinos, working men’s clubs and miners’ welfare clubs. Bingo and pubs may get carve-outs, Adult Gaming Centres (AGCs) look the most exposed. It arrives six months after the Remote Gaming Duty jump already reshaped the online side of the market, and a year ahead of the Remote Betting Duty rise scheduled for 2027.
The Betting and Gaming Council has come out against it directly: “We fundamentally oppose any increase in Machine Games Duty and nothing in this report justifies such a damaging policy. Doubling Machine Games Duty would not protect those communities. It would force venue closures, cost jobs and weaken high streets.” The Betting & Gaming Council (BGC) also points to a gap in the case for it: “The report makes no attempt to quantify the venue closures or job losses its own proposals would cause.”
Why do tax rises hit small operators harder than Flutter and Entain?
This is the part that actually determines whether a business survives, not just what it owes. Evan Meyer, co-founder of Astralis Capital Management, put it simply, “the tax hikes will destroy the existing smaller operators.” His suggestion is a split by size, not a sector-wide hit. Flutter and Entain face an estimated £300m to £500m annual earnings reduction from the Remote Gaming Duty (RGD), which is real money, but both companies have the balance sheet, the product spread and the cost-cutting room to work through it. Independent bookmakers, single-site AGCs and regional casino groups don’t have that flexibility. For most of them, the tax increase isn’t a line item, it’s the margin.
Meyer also challenges the Treasury’s revenue logic, citing PwC research showing that duties above roughly 25% of GGR tend not to deliver proportional revenue gains, pointing to underperforming precedents in Pennsylvania, Illinois and Delaware. Analyst Dan Waugh makes a similar point about the current MGD modelling, arguing the Treasury’s case effectively assumes “zero impact on supply or demand from a doubling of duty,” despite venues that would, in his words, “undoubtedly close.” One industry source put it more bluntly still, “The assumption that the land-based sector can be sweated for more tax was really dumb.”
The numbers behind this aren’t abstract either. EY’s analysis for the BGC, modelling the more aggressive Institute for Public Policy Research’s tax proposal rather than the MGD plan specifically, puts the downside at 40,000 jobs lost, £8.4bn in stakes displaced to the black market, and £3.1bn wiped off the sector’s economic contribution, vs the Treasury’s revenue gain EY estimates at closer to £1bn, and potentially under £500m once the knock-on losses are netted off. A milder proposal modelled by the SMF still shows 30,200 jobs lost and £2.5bn in economic contribution gone. Betfred has separately warned that in a worst case it could close all 1,300 of its shops, putting roughly 7,000 jobs at risk.
Where does the displaced betting volume actually go?
This isn’t a hypothetical. H2 Gambling Capital has modelled the trajectory, and it’s not subtle. Between 2025 and 2031, offshore betting turnover is projected to nearly double, from £16.6bn to £36bn, with the black market’s share of online betting expanding from 10% to 22%. Illegal gambling revenue is projected to grow from £685m to £1.4bn a year, roughly 13% compound growth annually, while the licensed operator market shrinks by 12% in real terms over the same period.
BGC chief executive Grainne Hurst has called this the core failure of the policy, “The Chancellor’s tax hikes are handing illegal gambling operators a competitive advantage.” And “Customers won’t stop betting. They’ll simply take their money to the growing illegal black market.” That’s the mechanism worth sitting with commercially. Tax rises don’t shrink demand, they shrink the regulated supply meeting that demand, and offshore books with no licensing costs, no AML or KYC obligations and no UK tax bill are the direct beneficiaries, arguing the UK government is placing more gambling users at risk of harmful operators.
How many jobs have UK gambling tax rises already cost?
Bet365 confirmed 340 redundancies this week, roughly 3% of its workforce, across Stoke-on-Trent, Malta and Gibraltar, citing the RGD increase and the 2027 duty rise directly. It’s now the fifth major UK operator to announce cuts in the past year, following William Hill closing around 200 shops (15% of its retail estate) and Betfred shutting 132 shops with 600 plus jobs lost. Combined, announced losses across the UK’s largest operators now exceed 2,000, a figure that sits uncomfortably against the IPPR’s earlier view that tax-driven job losses would be “limited,” and one that gives the BGC’s 40,000-job warning a lot more credibility than it had six months ago. The regulated sector as a whole currently supports an estimated 109,000 jobs and roughly £4bn in annual tax contribution, the base that further duty rises appear to be eroding rather than protecting.
Is UK gambling tax policy building an oligopoly and promoting the black market?
None of this plays out as the industry shrinking evenly. It plays out as an oligopoly forming faster. Flutter and Entain can out-cost-cut, out-lobby and out-diversify their way through a multi-year tax squeeze that independent and SME operators structurally can’t survive on the same timeline.
Every closure, forced sale or wind-down among smaller operators removes a competitor from the board without the government collecting a matching revenue gain, because a meaningful share of that displaced volume, per H2GC’s own trajectory, doesn’t disappear, it goes offshore. The net effect is a smaller regulated market, concentrated in fewer and larger hands, sitting next to a growing unregulated one that the tax policy was never actually designed to shrink.
For any operator below Flutter or Entain scale, duty resilience now has to be a first-order variable in the viability conversation, not a line item absorbed after the fact. It belongs in product mix, jurisdiction exposure and M&A readiness, and it needs to be there before the October Budget lands, not after. Consolidation is coming either as a buyer or as a target, and the operators who move first on that distinction tend to end up on the better side of it.
Where does your business sit if MGD doubles on top of what’s already in force? Cost-cutting further, consolidating, or being consolidated?
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