The UK government has increased the tax on profits from fixed-odds gaming machines (FOGMs) in betting shops from 20% to 25%, a move that could lead to widespread shop closures and affect horse racing funding.
On October 28, 2026, Chancellor John Healey announced a 5% rise in Machine Games Duty (MGD) during his first budget. This tax applies to profits from fixed-odds gaming machines in betting shops. Although the increase falls short of the 40% rate recommended by the Social Market Foundation (SMF), it still poses a significant financial challenge for betting shops across the UK.
Brant Dunshea, chief executive of the British Horseracing Authority (BHA), highlighted the potential consequences for the sport. He said the increase could “still prove devastating for our sport“, warning that it presents a “clear risk” of “hundreds, if not thousands” of betting shops closing nationwide. These shops contribute about a third of British horse racing’s annual a3350 million income, with each shop providing roughly a325,000 annually through levies and rights payments for live coverage and data.
The potential closures threaten to reduce the sport’s funding by an estimated a357 million per year, according to independent modelling shared with the Treasury before the budget. This shortfall could impact prize money, racecourse viability, thousands of jobs, and vital horse welfare projects and research funded by racing revenues.
For players and bettors, the closures could limit access to local betting shops, which remain a primary way many fans engage with horse racing. Reduced physical venues may push some consumers toward online platforms or alternative gambling options, which have different regulatory frameworks and responsible gambling protections.
Gideon Salutin, co-author of the SMF report that advocated for a larger MGD increase, acknowledged that the rise reflects “the higher harm associated with this form of gambling”. However, he expressed skepticism that the modest 5% increase will significantly influence industry behaviour.
Players should be aware that tax changes can affect the availability and operation of betting venues, potentially altering where and how bets can be placed. The risk of shop closures may also reduce in-person support and responsible gambling resources available at physical locations.
The British Horseracing Authority has stated it will “urgently engage with the government to establish how we can work together to reduce the impact“ of the tax increase. This engagement aims to protect the sport’s future and the interests of its fanbase.
For ongoing updates on UK betting and player protection, visit GamblingNews.today UK and Betting.
Additional context on the budget’s broader impact on gambling can be found in The Guardian’s editorial on Labour’s budget and in SBC News coverage of HMRC’s proposed tax changes.
Source: Gambling | The Guardian.
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