The Machine Games Duty rate in the UK will rise from 20% to 25% from April 1, 2027. The increase was announced in the budget and applies to machines with a maximum stake above £1 or a maximum prize above £100.
According to HMRC, the tax and customs authority, the additional revenue will total £135 million in the 2027-28 financial year and £130 million in each of the following four years, or £655 million over five years. The change will affect about 5,100 operators and 12,400 sites.
The market had expected a harsher move. Analysts compare the rate with the 40% proposed by the Social Market Foundation think tank. For large groups, banks see the hit to profits as moderate. Goldman Sachs estimates that Entain's 2028 EBITDA will fall by about 1.5%, provided 30% of direct costs can be offset. JP Morgan puts the impact on Entain and Evoke at about 3% of EBITDA on average for 2027 before offsets, and called the effect on Flutter negligible.
Entain itself estimates the extra costs for its UK and Ireland retail business at £25 million a year before offsets. The company expects to fully cover them by the end of 2028 by shrinking its shop estate, optimising within the group and winning customers from rivals. It has not changed its 2026 forecasts. CEO Stella David said the company's priority is to protect jobs.
The effect is more visible for operators with physical venues. Rank estimates annual costs at £9 million of operating profit before offsets. Goodbody expects Rank's adjusted 2027 EBITDA to fall by about 5%. Peel Hunt cut its 2028 operating profit forecast by £9 million and its target price from 175 to 155 pence.
Consultancy Regulus Partners calls the increase a cash-flow blow that will be “fatal for many marginal venues.” By its estimates, the annual burden will average £11,000 per betting shop and £100,000 per casino, and over five years the increase will lead to roughly 2,750 shop closures.
The next checkpoint is Rank's interim results in January, where analysts expect more detail on its offset plan.
