Adult gaming centres (AGCs), whose business is built around gaming machines, could face higher machine games duty (MGD) as the government considers tax changes for its 28 October budget. A rise would affect arcades and betting shops, which pay MGD at the same rates, and could put pressure on venues already competing for high-street customers.
Arcades gain ground
Chancellor John Healey is considering a duty increase aimed at betting shops and AGCs. MGD currently ranges from 20% to 25% on most machines and raises about £600 million a year. The Social Market Foundation (SMF) has proposed a 40% rate for casinos, arcades, betting shops, bingo halls and members’ clubs, but not pubs. It estimates that could raise up to £458 million, while putting the economic cost of machine-gaming harm at £2.33 billion. No new rate has been confirmed.
Arcades account for around 4% of licensed gambling spending, Dan Waugh, a partner at Regulus Partners, said. Within machine gaming, AGCs take about a quarter of licensed spending, compared with just under half for betting shops in 2024/25. The balance has shifted since the 2019 reduction of the maximum stake on fixed-odds terminals to £2, which Waugh said redirected spending towards casinos, bingo clubs and AGCs as betting shops closed.
AGCs also have lower operating costs. They pay a lower business-rates classification and statutory levy, and do not pay media-rights fees to screen racing. They can open later than betting shops, while a larger share of their machines are lower-stake Category C models.
Local control and tax risks
The SMF finds that Britain’s most deprived areas have, on average, six times as many AGCs as its least deprived areas. Waugh said the opposition to arcades appeared partly rooted in “snobbery”, and noted that Commission data show lower problem-gambling rates among arcade machine players than among people using machines in pubs.
The Gambling Commission licenses operators, while local councils issue premises licences. Under the Gambling Act 2005, councils must “aim to permit” applications that meet legal tests. Andy Burnham’s government has introduced Gambling Impact Assessments and says it will remove that requirement. Lord Foster of Bath, chair of Peers for Gambling Reform, called the current framework ineffective and wants councils to have more power to refuse new AGCs and funding to enforce existing rules. He also raised concerns about machine ratios and “infill” machines and tablets.
Entain chief executive Stella David warned in a 11 September letter that raising the standard duty from 20% to 40% would add around £100 million a year to the cost of its UK shops. EY modelling for the Betting and Gaming Council cited in the letter projected up to 1,470 closures, 15,900 job losses and a net £120 million loss to the Exchequer. On 15 October, David said 630 betting shops had closed across the industry in the past year, before any tax rise. Bacta said lawful industries should not be taxed or regulated out of existence.
Waugh expects a doubling of duty to cause closures across AGCs, bingo clubs, casinos, seaside arcades and betting shops. He also warned that illegal gambling could grow. Frontier Economics estimates that £1.6 billion a year is already wagered through illegal land-based gambling.
