Arcades Brace for Machine Games Duty Rise Ahead of 28 October Budget

^{An amusement arcade at Clarence Pier, Southsea. Arcade operators are waiting to see whether machine games duty rises at the 28 October Budget. (Photo: Oliver Mills / Wikimedia Commons)}

Adult gaming centres are bracing for a possible rise in machine games duty (MGD) at the 28 October Budget, with trade body Bacta urging the Government to leave the rate alone. The Financial Times has reported that Chancellor John Healey is weighing a rise aimed only at betting shops and arcades, according to iGaming Business.

The pressure has built over a week of lobbying. Ninety Labour backbenchers have written to the Chancellor asking for a higher rate for Category B machines, while no rate has been confirmed and Treasury officials are reportedly still modelling the options.

What Is on the Table

MGD is charged at 20% to 25% on most machines and raises about £600 million a year, according to iGaming Business. The Social Market Foundation (SMF), a think tank, wants a 40% rate for casinos, arcades, betting shops, bingo halls and members' clubs, but not pubs. It estimates that would raise up to £458 million and puts the cost of machine-gaming harm at £2.33 billion.

Arcades are a small slice of the market but a large political target. Dan Waugh, a partner at consultancy Regulus Partners, told iGB that adult gaming centres take around 4% of spending in the licensed market, going by Gambling Commission figures. On machines, they account for around a quarter of licensed spending, against just under half for betting shops in 2024/25.

Location drives much of the debate. The SMF finds that the most deprived areas have on average six times as many arcades as the least deprived. The Labour MPs' letter adds that 47% of arcades sit in the most deprived fifth of the country. Waugh rejects the framing, arguing that a large part of the hostility towards arcades comes down to snobbery.

Bacta and Operators Push Back

Bacta says seaside arcades support more than 11,000 full-time equivalent jobs and add £1.1 billion in gross value added to the UK economy each year. Ahead of the Budget it is asking the Government not to increase MGD, pointing to employment costs, energy bills and rents that are already squeezing family-run venues.

You cannot tax or regulate lawful industries out of existence simply because you dislike them.

That was Bacta's response to the political case, as quoted by iGaming Business. Elsewhere in the industry, the Betting and Gaming Council (BGC) cites EY modelling that a 40% rate could cost up to 16,000 jobs, close nearly 1,500 betting shops and 34 casinos, and leave the Treasury up to £124 million worse off. The BGC's Back Our Betting Shops campaign has run since 28 September.

Entain has been among the loudest operator voices. Chief executive Stella David told analysts on the third-quarter earnings call on 15 October that a rise would be ‘self-defeating’, adding that around 630 betting shops have closed across the industry in the past year, according to iGaming Business. Entain had already warned Prime Minister Andy Burnham about the cost of a duty increase.

Planning Reform Adds to the Squeeze

Tax is not the only lever. The Government has said it will scrap the 'aim to permit' rule that obliges councils to approve premises that meet the legal tests, and has introduced gambling impact assessments, as iGB reported. Lord Foster of Bath, who chairs Peers for Gambling Reform, told the outlet he wants communities to have more power to refuse new arcades.

Healey will set out any decision on MGD when he delivers the Budget on 28 October. Last year, his predecessor Rachel Reeves considered a rise in machine duty but dropped it after industry objections, and raised remote gaming duty from 21% to 40% instead. Operators will not know until Budget day whether arcades are caught.