UK pub operators have raised alarm over reports that Chancellor Rachel Reeves may sharply increase Machine Gaming Duty (MGD) in the forthcoming Budget, warning the move could place thousands of community pubs under extreme financial pressure.
Fruit and slot machines have been a staple of British pub culture for more than 50 years. Although their numbers have declined, they remain a vital revenue source. The trade body UKHospitality estimates nearly 36,700 machines operate in about half of the UK’s pubs, generating £622 million annually. After taxes, supplier fees, and other costs, operators keep roughly £385 million, or around £8,500 per pub. Margins are already tight due to rising costs and staff shortages.
Industry leaders fear that significant increases in gambling taxes, reportedly under discussion to help close a £30 billion public finance gap, would be devastating. Suggestions include raising sports betting duties from 15% to 30% and lifting duties on machine and online slots from 20% to 50%. For pubs, where gaming machines are low-stakes and secondary to core trade, such increases could wipe out much of the modest revenue they provide.
Lawson Mountstevens, managing director of Star Pubs, said pubs are under “tremendous pressure” following last year’s hikes in Employer National Insurance and the national minimum wage. “Our low-stakes machines are an important revenue stream. Any move that erodes their value puts further strain on our ability to serve communities,” he said.
James Baer, executive chairman of Amber Taverns, called a potential rise an “unwelcome setback” following what he described as a “savage attack” on the sector last year. Greene King CEO Nick Mackenzie warned that an MGD increase could be “the tipping point” for pubs already grappling with soaring operational costs. The British Beer & Pub Association (BBPA) estimates that a rise to 50% could cost the industry £187 million annually, putting around 16,300 jobs at risk.
JD Wetherspoon is also bracing for losses. Peel Hunt analyst Douglas Jack estimates a 50% MGD rate could cost the chain £18 million. Founder Sir Tim Martin stressed that while gaming machines contribute a small portion of sales, they remain “an important part of pub economics” and are “already highly taxed.”
Industry experts warn that higher taxes could backfire. Chris Jowsey, CEO of Admiral Taverns, noted that excessive MGD may make machines unprofitable, prompting their removal and potentially reducing overall tax revenue. At Admiral’s 1,300 pubs, net machine revenue could fall from £6,000 to £2,625 per venue under the proposed tax.
With 332 pub closures projected before the Budget, trade bodies such as the BBPA and UKHospitality are urging the government to freeze duty on Category C low-stakes machines and Category D arcade-style machines, which are widely used in pubs. Kate Nicholls, chairwoman of UKHospitality, said machine income has become “increasingly important” for pubs navigating rising costs.
A Treasury spokesperson confirmed that tax decisions will be announced at the Budget and said the consultation focuses on remote betting websites, which generate higher profits with fewer staff. Industry leaders remain unconvinced, warning that any sharp rise in MGD could accelerate closures, cut jobs, and weaken local high streets.
