The chancellor, John Healey, is reportedly weighing a sharp increase in the machine‑games duty (MGD) from 20 % to 40 % in his first budget, a move that could add between £275 million and £460 million to annual tax receipts on top of the roughly £610 million collected last year. The proposal, championed by the Social Market Foundation, has reignited a long‑standing policy clash between those who argue the levy would curb gambling harm and industry leaders who claim it would force shop closures and cost thousands of jobs.
The Case for a Tax Hike
The think‑tank’s analysis suggests that raising the duty could generate a substantial boost for the Treasury, providing funds that could be earmarked for public‑health programmes aimed at problem gambling. Andy Burnham, the mayor of Greater Manchester and a vocal critic of high‑street slots, has repeatedly called for tighter regulation, arguing that the current rate fails to reflect the social costs associated with addictive gambling. In a recent speech, Burnham highlighted the proliferation of 24‑hour adult gaming centres (AGCs), describing them as “slot farms” that exploit regulatory loopholes and contribute to community distress.
Proponents of the increase also point to the broader shift toward online gambling, which has already reshaped the sector’s revenue streams. They argue that a higher levy on physical machines would help level the playing field, ensuring that land‑based operators contribute fairly to the costs they impose on society. The Social Market Foundation’s report, which forms the backbone of the campaign, underscores that the additional revenue could be reinvested in treatment services, research, and prevention initiatives—areas currently under‑funded despite rising problem‑gambling rates.
Industry Warns of Shop Closures and Job Losses
Industry representatives, however, paint a starkly different picture. Fred Done, the billionaire founder of Betfred, has warned that a jump to 40 % would force the closure of roughly 495 betting shops—almost half of his estate—and eliminate 2 475 jobs, while stripping the Treasury of about £67 million in tax. In a letter to the chancellor, Done described the policy as “a death sentence for many high‑street bookmakers”, adding that the impact would ripple through ancillary businesses such as pubs and restaurants that rely on footfall from gambling venues.
The Betting and Gaming Council commissioned an EY report that estimated a 40 % duty could shut up to 1 470 shops—nearly a third of the 5 617 total—resulting in 15 900 job losses and a net £120 million drain on public finances. Entain, the owner of Ladbrokes and Coral, has also written to Burnham, signalling that its nationwide network of 2 300 shops would face unavoidable cutbacks should the duty rise. Rank Group, which operates Mecca Bingo and Grosvenor Casinos, cautioned that a third of its venues could close, affecting 2 000 staff.
Stewart Kenny, a co‑founder of Paddy Power who has become a critic of his former industry, dismissed Done’s warnings as “scaremongering”. Kenny argued that the sector’s own data shows many shops are already underperforming and that the tax increase would simply accelerate an inevitable consolidation. He pointed to the fact that Betfred has previously threatened closures in response to regulatory changes, yet the actual reduction in shop numbers since 2019 has been modest—around 330—suggesting that many of those threats are strategic posturing.
Is the Industry Overstating the Damage?
Historical patterns lend credence to the idea that industry warnings may be exaggerated. In 2019, Betfred operated roughly 1 620 shops. Over the subsequent years, the company has repeatedly threatened to close nearly 1 000 locations in response to tougher regulation or higher taxes. Despite those threats, the actual decline has been limited to about 330 sites, a shortfall that analysts attribute to a broader migration toward online platforms. Online gambling revenues have surged, offsetting losses from physical outlets and providing a buffer against fiscal shocks.
Betfred’s founder, Fred Done, has also been extracting substantial dividends from the business. In 2022 alone, the Done family took £50 million in payouts, a fact that critics argue underscores a disconnect between the company’s public concerns about profitability and its private financial practices. Meanwhile, Bet365— which operates exclusively online—cited the previous chancellor Rachel Reeves’s budget tax rise as a catalyst for cutting around 300 jobs at its Stoke‑on‑Trent headquarters. A spokesperson explained that the reductions were driven by a “highly competitive trading environment, plus increased regulatory and tax‑related costs”, though internal sources suggest that AI adoption, which had been expanding well before the tax change, also played a role.
Simon Thomas, chief executive of London’s Hippodrome Casino, illustrated the immediate impact of policy uncertainty on investment. “We have a £6 million rooftop expansion plan with full planning permission, ready to go. With MGD up in the air, we’ve had to shelve it,” he said. Thomas warned that if the duty climbs to 40 %, roughly a third of bingo halls and a third of casinos could be forced to close, compounding the sector’s existing challenges.
Potential Unintended Consequences
While the chancellor’s officials weigh the fiscal benefits, they must also consider the law of unintended consequences. The rise of 24‑hour adult gaming centres, which already enjoy lower overheads and looser regulation, suggests that a steep tax on traditional betting shops could simply shift the landscape rather than shrink it. Merkur, an AGC operator, has already signalled its readiness to acquire some of the 132 shops Betfred put up for sale, indicating confidence that the sector can adapt.
Data from last year shows AGCs increased their takings from £528 million to £613 million by packing more machines into larger venues. This growth underscores their resilience to tax pressure, as their business model relies on high machine density and minimal staffing. If traditional bookmakers are forced to close, these slot farms could fill the void, potentially concentrating gambling activity in fewer, larger sites and raising fresh concerns about community impact.
Moreover, the government’s broader agenda of curbing problem gambling could be undermined if the tax hike drives operators toward online channels, where age verification and spending controls are harder to enforce. The Treasury must balance short‑term revenue gains against long‑term public‑health objectives, ensuring that any fiscal measures do not inadvertently exacerbate the very harms they aim to mitigate.
Why it Matters
The forthcoming decision on machine‑games duty will shape the future of Britain’s high‑street gambling sector, influencing everything from local employment and community vitality to the Treasury’s capacity to fund public‑health programmes. If the tax rises as proposed, the immediate effect will be felt in shop closures and job losses, but the longer‑term ramifications could include a shift toward larger, 24‑hour slot farms and an acceleration of the move to online platforms, potentially complicating efforts to protect vulnerable gamblers. Conversely, failing to increase the duty may preserve existing jobs but leave the government missing out on hundreds of millions in potential revenue that could be redirected toward treatment and prevention services. The chancellor’s balancing act will therefore determine whether the policy succeeds in reducing gambling‑related harm without inflicting undue economic damage on communities that rely on these venues.
