Racing and betting industry brace for Budget gaming machine tax decision

Horse racing is waiting to see whether the Budget on Wednesday 28 October will raise the tax on gaming machines in British betting shops. John Healey was widely expected to increase Machine Games Duty, the tax on the machines that sit on the high street next to the betting counter.

The rate is 20% at the moment. Pre-Budget rumours suggested a smaller rise, to 25%. A Social Market Foundation report in June recommended doubling the duty to 40%, and the Treasury has not yet said which way it will go. The Guardian reported the expectation of a rise ahead of the Budget.

The gambling industry has warned loudly. Citing a Regulus Partners report, it says a rise to 40% could force up to 4,000 of the UK's 5,500 betting shops to close over three years. Even a rise to 25% could lead to hundreds of closures, it argues. Those closures, it says, could cost racing £92m a year in income, about a third of what the sport makes from betting.

Why does a tax on machines matter to horse racing? Betting shops pay racing through the Levy, a fee that funds prize money and welfare work. Racing also earns money from media rights, the fees paid for live pictures and data from its meetings. The Regulus report estimated that racing receives around £27,000 from the average shop's £440,000 yearly revenue.

The British Horseracing Authority, the sport's regulator, has taken a firm line. Its director of communications and corporate affairs, Greg Swift, said a hike would have devastating consequences, hitting prize money, Levy funding and investment in equine welfare and veterinary research.

This is not the first time racing has fought a tax battle. In 2025, Rachel Reeves exempted horse racing from a rise in betting duty after the sport's Axe the Tax campaign. Betting duty is a different tax, levied on the bookmakers' winnings, and this year's debate is about the machines.

The number of shops has already fallen sharply. There were around 5,500 in October 2026, down from about 9,000 a decade earlier. The Betting and Gaming Council, which represents the industry, said more than 600 shops have closed or announced closure since the last Budget, and that over 10,000 jobs have been lost or put at risk.

The other side of the argument is also on the table. The Guardian has reported that doubling slot machine duty would raise up to £460m more a year for the Exchequer, the government's central account. Campaigners who want higher gambling taxes say the machines pull in heavy losses from ordinary players, and that the money should go to public services.

For racing, the next step is simple. The Budget will set the rate, and the sport will then measure what the change means for its income from the high street. Prize money and welfare budgets for the coming seasons depend on that answer.