The UK government has raised machine games duty from 20% to 25% effective April 2027, well below the 40% rate some had proposed. Investors view the increase as manageable, but analysts warn closures and reduced investment are unavoidable.
HMRC estimates the measure will yield £135 million in 2027–28 and £130 million annually over the following four years, totalling £655 million across five years. The tax will affect around 5,100 operators and 12,400 premises. Regulus Partners notes the additional annual bill of roughly £130 million represents nearly one-third of the sector's free cash flow, estimated at £392 million after capital expenditure.
The burden varies by venue type: from £11,000 per year for a betting shop to £100,000 for a casino. Regulus forecasts the tax will drive approximately 2,750 betting shop closures over five years. The Betting and Gaming Council cited EY projections of almost 9,000 jobs at risk and around 1,000 premises facing closure or serious jeopardy.
Entain, owner of Ladbrokes and Coral, estimates an additional annualised £25 million cost to UK and Ireland retail but expects to offset the impact fully by end-2028 through estate rationalisation, group-wide savings and customer recapture from competitors. Goldman Sachs projects a 1.5% impact on Entain's 2028 EBITDA assuming 30% mitigation of direct costs. Morgan Stanley models around 10% of shops closing.
Rank Holdings faces heavier pressure: analysts expect adjusted EBITDA to fall roughly 5% in FY2027, against 2% at Entain. Peel Hunt cut Rank's target price from 175p to 155p. Deutsche Bank warned the increase may affect the company's medium-term investment plans.
The dividend for investors is the removal of uncertainty and a softer rate than markets feared. But the real cost will emerge over months and years, as leases expire and operators decide whether marginal sites justify refurbishment.
