UK Labour Government Tightens Gambling Tax Regime as Industry Warns of Closures and Job Losses

Britain’s Labour government is pressing ahead with another round of tax increases targeting the gambling industry, intensifying pressure on bookmakers, casinos, bingo operators and gaming machine businesses.

The latest measures, centred on a higher tax rate for certain gaming machines, are expected to generate substantial additional revenue for the Treasury but have prompted renewed warnings from industry representatives about employment losses, business closures and the potential expansion of illegal gambling.

The latest decision will see Machine Games Duty (MGD) on higher-stake gaming machines increase from 20% to 25% from 1 April 2027. The revised rate will apply to machines offering stakes above £1 or prizes exceeding £100, with the tax calculated on their net takings.

The measure is expected to affect approximately 5,100 registered operators across 12,400 active premises, according to estimates from HM Revenue & Customs. The businesses concerned include betting shops, casinos, bingo halls and adult gaming centres, all of which could face higher operating costs once the new arrangements come into force.

The Treasury forecasts that the increase will generate approximately £135 million in additional revenue during the 2027–28 financial year. It expects annual receipts to settle at around £130 million over the following four years.

However, the tax increase will not apply uniformly across the gaming machine sector.

Machines offering lower stakes will retain their existing tax treatment. The government argues that higher-stake and higher-prize machines are more closely associated with gambling-related harm, making them an appropriate target for increased taxation. By maintaining the existing treatment of lower-stake machines, ministers say they are also seeking to protect products commonly found in pubs and traditional seaside arcades.

Industry warns of widespread closures and employment losses

The Betting and Gaming Council (BGC) has strongly criticised the government's decision, warning that the higher tax rate could have serious consequences for Britain's regulated gambling industry.

According to modelling commissioned by the trade association from EY, the increase could put almost 9,000 jobs at risk and result in nearly 1,000 betting shops and casinos closing or facing a serious threat of closure.

The organisation also highlighted the difficulties already confronting the sector. It said that more than 600 betting shops had closed or announced plans to close since the previous Budget, while over 11,000 positions across online and land-based gambling had either been lost or placed at risk.

BGC chief executive Grainne Hurst described the latest decision as a major blow to businesses, employees and communities that depend on the regulated betting and gaming market. She argued that the government had failed to take repeated industry warnings into account when deciding to proceed with the increase.

The association's concerns extend beyond the immediate financial impact on individual operators. Higher taxation, it argues, could weaken the commercial viability of licensed gambling businesses, particularly those operating physical premises with substantial staffing and property costs.

Entain faces additional £25 million annual cost

Among the operators preparing for the consequences of the tax changes is Entain, the international gambling group that owns Ladbrokes and Coral.

The company expects the increase in Machine Games Duty to add approximately £25 million to the annual costs of its UK and Ireland retail division, before any mitigating measures are taken.

Entain has indicated that it intends to absorb the additional burden through a combination of operational restructuring and cost-saving initiatives. Its plans include rationalising its shop estate, pursuing efficiencies across the wider group and potentially gaining market share as competing operators reconsider their presence in the British market.

The company expects to offset the full financial impact of the tax increase by the end of 2028.

Despite the additional pressure, Entain has maintained its financial guidance for 2026 and reiterated its ambition to generate £500 million in annual adjusted cash flow during 2028.

Chief executive Stella David criticised the government's approach, arguing that the latest changes would compound the damage caused by previous gambling tax increases. She said the consequences were already being felt by employees, local communities and customers.

David also warned that higher taxes could encourage more consumers to turn towards unlicensed gambling operators, which do not face the same UK gambling duty obligations as regulated businesses.

Latest increase follows broader gambling tax overhaul

The increase in Machine Games Duty forms part of a much wider programme of gambling taxation changes announced in the government's 2025 Budget.

One of the most significant measures was the increase in Remote Gaming Duty, which rose from 21% to 40% on 1 April 2026. This represents a substantial increase in the tax burden on remote casino gaming and other relevant online gambling products.

Further changes are scheduled for 1 April 2027, when the duty on most remote fixed-odds betting will increase from 15% to 25%. Online bets on British horseracing, however, will retain their existing 15% tax rate.

The government's measures also extend to land-based gambling businesses. Adult gaming centres in England will lose access to business-rate support available to certain retail, hospitality and leisure businesses. Meanwhile, Gross Gaming Yield bands for land-based casinos will be frozen throughout the 2027–28 financial year.

Taken together, these changes demonstrate the breadth of the government's efforts to increase tax revenues from the gambling sector, covering online casinos, remote sports betting, gaming machines and traditional gambling premises.

Changes to gaming machine tax liability from 2028

A further reform concerns the responsibility for paying Machine Games Duty on machines supplied under profit-sharing arrangements.

From 1 April 2028, liability for the duty on supplier-owned machines operating under these agreements will transfer from the venues hosting them to the machine suppliers themselves.

The government has launched a 12-week consultation on how the reform should be implemented. The change could alter the financial and contractual relationships between gaming machine suppliers and the venues in which their equipment is installed.

Although the reform changes which party is responsible for the tax, it forms part of the wider restructuring of the regulatory and fiscal framework governing Britain's gaming machine market.

Government and industry remain divided over the consequences

At the heart of the dispute is a fundamental disagreement over the economic and social consequences of higher gambling taxation.

The government maintains that a risk-based approach is justified, particularly where products involving higher stakes and prizes are concerned. From this perspective, increased taxation forms part of a broader effort to address gambling-related harm while raising additional public revenue.

Industry representatives, however, argue that the cumulative effect of successive tax increases could undermine the regulated market. They contend that licensed operators are being forced to absorb significantly higher costs while competing against illegal gambling businesses that do not pay UK gambling duties or operate under the same regulatory requirements.

The possibility of further betting shop and casino closures has become a particularly significant concern. Physical gambling venues provide employment and contribute to local commercial activity, while their closure could reduce the availability of regulated gambling facilities in communities across the country.

Operators must now consider how far additional efficiencies and restructuring can offset the government's tax measures without damaging their businesses, reducing investment or further shrinking their retail networks.

The government's latest decision therefore represents more than an isolated increase in gaming machine taxation. It marks another stage in Labour's broader tightening of the fiscal regime governing Britain's gambling industry, setting up a potentially difficult period for licensed operators as they attempt to balance higher taxation, commercial sustainability and competition from the illegal market.

By fLEXI tEAM