Machine Games Duty (MGD) Tax Expected To Rise By Only 5%

British horse racing and the gambling industry appears poised to secure a favourable outcome in the forthcoming Budget, with a report in The Times indicating that the rise in Machine Games Duty (MGD) will be substantially lower than the increases advocated by former Prime Minister Gordon Brown. Sources have indicated to The Times that MGD, currently levied at 20 per cent, is expected to rise to 25 per cent rather than the 40 per cent rate that had been under consideration. The development represents a significant relief for racing and the wider betting industry, both of which have lobbied intensively against more severe taxation proposals.

Background to the Tax Debate

The current position follows a prolonged period of uncertainty for the sport. In advance of previous fiscal statements, Gordon Brown backed a proposal from the Institute for Public Policy Research (IPPR) that would have raised gambling taxes substantially, including gaming duties of up to 50 per cent and a betting duty rate of 25 per cent, in a plan projected to generate £3.2bn from the betting industry. Racing bodies argued that such measures would have dealt a grave blow to the sport’s finances, with analysts warning that each betting shop closure costs British racing approximately £6,000 in Levy contributions and roughly three times that figure in media rights revenue.

The industry’s concerns culminated in an unprecedented show of force in September 2025, when the British Horseracing Authority cancelled all scheduled racing on 10 September as a one-day strike in protest against proposed betting tax rises. The “Axe the Tax” campaign subsequently achieved a notable victory at the November 2025 Budget, when Chancellor Rachel Reeves confirmed that General Betting Duty on horse racing would remain unchanged at 15 per cent.

The Current Fiscal Landscape

The broader tax settlement, however, has introduced new pressures elsewhere in the gambling sector. Remote Gaming Duty will rise from 21 per cent to 40 per cent from 1 April 2026, while General Betting Duty on online sports betting is scheduled to increase from 15 per cent to 25 per cent from April 2027. Crucially for racing, remote bets on UK horseracing have been excluded from the higher remote rate, preserving the sport’s existing treatment. General Betting Duty paid on other sports betting in shops will remain at 15 per cent.

In recent weeks, industry executives have continued to press the government for restraint. Bookmakers have urged Chancellor John Healey to pause the scheduled 2027 General Betting Duty increase until the impact of tax rises already introduced can be properly assessed, warning of further job losses and shop closures if additional levies are imposed.

For racing’s leadership, the expectation of a limited 5 per cent rise in MGD – rather than a doubling – will be viewed as confirmation that the sport’s sustained advocacy has shaped government thinking. Nevertheless, industry stakeholders are likely to remain watchful. Betting turnover has continued to decline, and the full financial effects of the 2026 and 2027 duty changes on operators, retail venues and, by extension, racing’s funding streams are yet to be realised.

While the anticipated Budget outcome falls short of the worst-case scenarios previously canvassed, the episode underscores the sector’s continued vulnerability to fiscal policy. The industry’s ability to marshal a unified, evidence-led campaign has demonstrably influenced results to date; maintaining that coherence through the implementation period ahead will be central to protecting the sport’s long-term financial stability.