Pub Owners and Hospitality Leaders Sound the Alarm Over Tax Increases on Gaming Machines
Pub operators and hospitality leaders are raising red flags about Chancellor Rachel Reeves’ potential tax hike on gaming machines, warning it could significantly hurt an industry already grappling with rising costs, staff shortages, and shaky consumer confidence.
With whispers getting louder that the Chancellor may sharply raise the Machine Gaming Duty (MGD) in the upcoming Budget on November 26, industry groups are concerned that this move could take away vital revenue support for thousands of local pubs.
Fruit machines have been a beloved part of Britain’s pub scene for over half a century. Even though their numbers have dipped, they still provide important income. According to UKHospitality, nearly 36,700 fruit and slot machines are operational in almost half of the UK’s pubs, bringing in around £622 million each year. After taxes, supplier rents, and other charges, operators net about £385 million — that’s roughly £8,500 per pub — at a time when profit margins are already “paper-thin.”
The anxiety is growing as reports suggest Reeves might introduce hefty increases in gambling taxes to help fill a £30 billion gap in public finances. Proposed changes include hiking sports betting duties from 15% to 30% and raising machine and online slots duties from 20% to a staggering 50%. For pubs, which usually offer low-stakes gaming machines as a minor part of their business, such a steep increase could be catastrophic.
Lawson Mountstevens, managing director of Heineken-owned Star Pubs, expressed that pubs are already under immense strain due to last year’s rise in Employer National Insurance and the national minimum wage. “Our low-stakes machines are a crucial source of revenue. Any move that diminishes their value further challenges our ability to serve communities throughout the UK,” he stated.
This concern is echoed by others in the industry. James Baer, executive chairman of Amber Taverns, described increasing MGD on machines that are “secondary” to pubs’ main business as another “unwanted setback” following what he called a “brutal attack” on hospitality last year.
Greene King CEO Nick Mackenzie cautioned that this tax measure could “unintentionally be the tipping point” for pubs already struggling with an overwhelming wave of costs. The British Beer & Pub Association (BBPA) estimates that raising MGD to 50% could cost pubs a whopping £187 million yearly, resulting in around 16,300 job losses.
Emma McClarkin, chief executive of the BBPA, stated the consequences could be dire. “These are low-margin businesses that provide countless jobs for young people. Any increase in operational costs brings them closer to the brink of permanently closing their doors,” she explained.
Experts believe publicly traded pub companies could take a big hit as well. JD Wetherspoon, which is already facing £60 million in extra annual costs due to labor changes, could see an additional £18 million cost if MGD rises to 50%, according to analyst Douglas Jack. Founder Sir Tim Martin acknowledged that while gaming machines represent a small slice of Wetherspoon’s sales, they play a vital role in pub finances and are already heavily taxed. Another tax hike may be “the final straw.”
The industry is concerned the government’s estimates could be misguided. Instead of generating additional revenue, higher taxes might make many gaming machines unprofitable, leading to their removal and possibly reducing overall tax income. Chris Jowsey, CEO of Admiral Taverns, warned that this would have a “devastating impact,” decreasing income for pubs in areas with limited revenue alternatives. Currently, machines at Admiral Taverns’ 1,300 locations generate about £6,000 in net revenue yearly; under the proposed tax rate, this could plummet to £2,625.
As if financial struggles weren’t enough, industry leaders stress that the timing is especially unfortunate. New projections from the BBPA indicate that 332 pubs could close by the time the Chancellor presents her Budget. There’s a real worry that increasing MGD will only speed up the decline of these cherished community venues.
Trade organizations like the BBPA and UKHospitality are now urging the government to freeze duties on Category C low-stakes fruit machines and Category D arcade-style penny fall machines, both of which are heavily relied upon in pubs and recreational spaces.
Kate Nicholls, chairwoman of UKHospitality, emphasized that many pubs have become increasingly reliant on machine income as operational costs soar. Raising MGD on these machines, she argued, would seriously harm the long-term viability of the sector.
A spokesperson for the Treasury said tax decisions will be revealed during the Budget, noting that their consultations on gambling taxation focus on online betting platforms, which employ fewer staff, incur lower expenses, and yield higher profits than traditional venues.
Industry leaders remain skeptical. “This wouldn’t bring in the expected revenue,” Jowsey argued. “It would accelerate pub closures, eliminate jobs, empty out high streets, and probably decrease overall tax revenue. It would feel like the rug was being pulled from under community pubs.”