Bacta Urges UK Government to Keep Machine Games Duty at 20%
United Kingdom.- 28 October 2026 | www.zonadeazar.com Bacta, the British trade association representing the low-stakes amusement and gaming industry, has published a letter supported by 120 independent businesses urging the UK Government to maintain Machine Games Duty (MGD) at 20%.
The initiative comes ahead of the national Budget announcement scheduled for 28 October 2026, amid speculation that the tax rate could increase to 25% or even 40%.
The businesses warn that a substantial increase could threaten employment, family-run venues and economic activity connected to the land-based leisure industry.
Letter Supported by 120 Businesses
Bacta has published an appeal addressed to Chancellor of the Exchequer John Healey, calling for the existing tax framework to remain unchanged.
The letter has been co-signed by 120 independent businesses, including amusement operators, bingo venues, family-run companies, manufacturers and suppliers.
The signatories believe that increasing MGD could undermine the financial sustainability of numerous businesses, particularly those operating with relatively narrow margins.
The initiative forms part of wider industry efforts to influence the Government’s forthcoming fiscal decisions.
Machine Games Duty Could Rise to 40%
Machine Games Duty currently stands at 20%, although several potential increases have been discussed in recent months.
The scenarios mentioned include:
- Current rate: 20%.
- First potential scenario: 25%.
- Second potential scenario: 40%.
- Scheduled Budget announcement: 28 October 2026.
An increase to 25% would represent a five-percentage-point rise, while a 40% rate would double the current level.
However, neither proposed increase had been officially confirmed when the letter was published.
Operators Face Statutory Restrictions
One of Bacta’s central arguments is that operators have limited opportunities to pass additional costs on to customers.
UK legislation establishes maximum stake and prize levels for certain categories of gaming machines.
Consequently, businesses cannot freely increase wagering amounts or prizes to compensate for higher taxation.
Bacta argues that these restrictions create particular financial pressures for operators offering low-stakes gaming entertainment.
Operating Costs Continue to Increase
The letter also highlights the significant increases in operating expenditure already affecting businesses.
The main pressures identified include:
- Higher energy bills.
- Rising commercial rents.
- Wage inflation.
- Increased employer National Insurance contributions.
According to Bacta, these costs are reducing the ability of businesses to maintain operations, employ staff and finance investment.
The organisation believes that an additional MGD increase could worsen existing financial challenges.
£56 Million in Irrecoverable VAT
Another concern is the existing tax burden faced by businesses across the sector.
Bacta reported that its members incurred approximately £56 million in irrecoverable VAT during 2025.
These costs represent funds that businesses cannot reinvest in modernising facilities, expanding operations or supporting further development.
The association argues that the combination of irrecoverable VAT, increasing operating expenses and a potential MGD rise could threaten the long-term viability of numerous venues.
Statements From Bacta’s President
Joseph Cullis, President of Bacta, emphasised the contribution of the businesses represented by the association to local communities.
“They provide thousands of jobs, support local economies and are at the heart of high streets and seaside communities across the country,” he stated.
Cullis also warned about the potential impact of higher taxation.
“An increase in Machine Games Duty would put jobs, livelihoods and the future of longstanding family businesses at serious risk. For some, it could be the final straw,” he added.
Employment and Community Concerns
Bacta argues that the consequences of an increase would extend beyond gaming venues themselves.
The closure of amusement and bingo establishments could also affect companies providing essential services to the industry.
Potentially affected sectors include cleaning, security, food and beverage supply, transport and professional services.
The association also warned that many venues operate in areas where employment opportunities are already limited.
From this perspective, business closures could have wider consequences for local economies.
Impact on Coastal Communities
Low-stakes amusement businesses have traditionally maintained a strong presence in British coastal towns.
Amusement arcades and related venues form part of the tourism and commercial infrastructure of many communities.
Bacta believes that increasing the tax burden could threaten the viability of these businesses and reduce their capacity to invest.
The association also questions whether higher taxation of the sector is consistent with the Government’s objective of supporting economic growth across different parts of the country.
Industry Calls for a Balanced Tax Policy
Bacta’s intervention follows other initiatives by the British gambling industry seeking to prevent further tax increases affecting land-based operators.
Industry representatives argue that fiscal decisions should recognise the differences between individual gambling sectors.
In particular, they emphasise that low-stakes gaming machine operators face specific statutory restrictions and cost structures that differ from those of other gambling products.
The sector is urging the Government to consider these characteristics before introducing changes to the tax framework.
Next Steps
Chancellor of the Exchequer John Healey is scheduled to present the UK Budget on 28 October 2026.
The announcement will clarify whether the Government intends to retain Machine Games Duty at 20% or introduce changes.
Bacta hopes that the letter signed by 120 businesses will encourage policymakers to consider the economic and employment implications of a potential increase.
The organisation warns that higher taxation could lead to venue closures, job losses and reduced investment in communities supported by the land-based leisure industry.
For now, the potential increases to 25% or 40% remain unconfirmed scenarios.
Edited by: @fonta
