Gaming Machine Duty Rises, Closures on the Agenda in the Sector

The UK gaming machine duty rate will rise from 20% to 25%. The change will take effect on 1 April 2027. The increase is well below the 40% proposed by the Social Market Foundation, and it has a relatively limited effect on the earnings of companies operating in several areas.

However, the situation is different for businesses that rely on physical venues. Regulus Partners warned that the cash flow cut will leave many marginal venues unable to stay open. According to HMRC's policy paper, additional tax revenue will be 135 million pounds in 2027-28 and 130 million pounds in each of the following four years. The document estimates that around 5,100 operators and 12,400 venues will be affected.

According to Regulus, the burden becomes heavier when measured by free cash flow rather than turnover. The additional tax of about 130 million pounds equals roughly one third of 392 million pounds in free cash flow. The estimated annual additional cost averages 11,000 pounds for a betting shop and 100,000 pounds for a casino.

Entain expects its 25 million pounds in annual additional costs to be fully offset by the end of 2028. The company's plan relies on reducing venue sizes, group-wide efficiency, and the opportunity to win customers as rivals leave the market. The company maintains its target of 500 million pounds in annual adjusted cash flow for 2028.

Entain Chief Executive Stella David said the company will try to protect jobs. However, in her view, the tax increase comes on top of last year's increase, and this could lead players to move to illegal operators.