Chancellor Weighs Machine Games Duty Rise on Category B Slots
Yves Hughes · Sep 10, 2026
Chancellor Weighs Machine Games Duty Rise on Category B Slots
UK Chancellor John Healey is examining an increase in Machine Games Duty applied to Category B slot machines that carry a £2 stake limit, and the review forms part of preparations for the October 28 budget round. Tight public finances have prompted the examination, while earlier analysis from the Social Market Foundation proposed doubling the current 20 percent rate to 40 percent in order to raise additional revenue. Observers note that the step would apply specifically to these machines, which remain a core product in betting shops across the country.
Background to the Duty Consideration
The Machine Games Duty framework sets the tax rate on gaming machines based on stake levels and machine category, and Category B devices with the £2 maximum stake have operated under the 20 percent levy for several years. Data from regulatory filings show these machines generate a measurable share of non-remote gross gambling yield, which means any rate adjustment would affect both operators and the Treasury directly. The Social Market Foundation outlined its doubling suggestion in a report that highlighted potential fiscal gains, and the document has since fed into ongoing budget discussions.
Stakeholder Positions on the Proposed Change
The Betting and Gaming Council has stated its opposition to any increase and has warned that higher duty could speed up the closure of betting shops, reduce employment in the sector, and shift activity toward illegal operators that sit outside the regulated market. Industry figures indicate that licensed premises already face pressure from operating costs and changing consumer patterns, and the council argues that further tax pressure would compound those challenges. Government sources, meanwhile, have pointed to the need for revenue measures that support public spending commitments amid constrained budgets.
Those who follow gambling taxation note that the October 28 deadline creates a narrow window for final decisions, and any adjustment would take effect through the finance bill process that follows the budget announcement. The Chancellor has not yet confirmed the exact scale of any rise, yet the fact that the option remains under active review shows the priority placed on identifying new income streams.
Potential Effects on Licensed Operators
Category B machines form part of the product mix in high-street betting shops, and operators calculate margins after duty, machine costs, and staffing. An increase to 40 percent would raise the per-machine tax burden, and the Betting and Gaming Council has indicated that some locations might no longer cover their overheads. Figures released by the industry show that the number of betting shops has declined steadily in recent years, and the council links further reductions to reduced tax competitiveness. At the same time, Treasury analysts have modelled scenarios in which higher duty delivers net revenue even after accounting for possible volume changes.
Enforcement agencies have also flagged the risk that tax-driven price increases could push some players toward unregulated platforms, and the council has cited this channel shift as a key concern. Licensed operators already contribute through a range of levies and duties, and the current debate centres on whether an additional layer remains sustainable within the existing shop network.
Timeline and Next Steps
Discussions are taking place in September 2026 ahead of the formal budget statement, and the Chancellor’s team is reviewing submissions from both the Social Market Foundation and the Betting and Gaming Council. No final rate has been set, yet the inclusion of the measure in the current round of options indicates that revenue considerations carry weight. Once the budget is delivered on October 28, any duty change would move into legislative stages that determine implementation dates and transitional arrangements.
Those monitoring the sector point out that past duty adjustments have sometimes included phased introductions or accompanying regulatory tweaks, and similar measures could feature in the final package. The process remains fluid, and stakeholders continue to supply data on employment, yield, and compliance costs to inform the decision.
Conclusion
The review of Machine Games Duty on Category B £2 stake machines reflects the government’s focus on fiscal options for the October 28 budget, while the Social Market Foundation’s doubling proposal and the Betting and Gaming Council’s warnings provide the main points of reference. The outcome will shape tax liabilities for operators and influence the balance between regulated and unregulated gambling channels in the months ahead. Further details are expected when the Chancellor presents the full budget measures.