Budget 2026: MGD Rise to 25% Puts Up to £57m of Horse Racing Income at Risk
Chancellor John Healey has raised machine games duty (MGD) from 20% to 25% in today's Budget, and the British Horseracing Authority (BHA) says the move will cause "significant damage to racing's finances".
In a post on X, the BHA said the decision "will cost racing millions of pounds a year and threaten the future sustainability of our sport".
The rise is smaller than the 40% some campaigners wanted.
However, analysts Regulus Partners still estimate it could cost racing up to £57 million in levy and media rights payments.
MGD is charged on gaming machines such as the fixed odds betting terminals found in betting shops, not on bets placed on a horse.
So the impact on racing comes through the shops that fund it.
What the Budget Changed
The Government says the higher rate will apply to higher-risk machines, “commonly found in venues such as adult gaming centres”.
The rate for lower-stake machines will remain unchanged, with the aim of protecting pubs and seaside arcades.
The increase is due to take effect on 1 April 2027, according to Gaming Intelligence.
The Treasury expects the rise in Machine Games Duty (MGD), alongside a separate change to liability for duty on supplier-owned machines, to generate £135 million in 2027/28, rising to £150 million in 2028/29.
Healey said the revenue would help fund business rates support for high streets.
Why Racing Is Exposed
Betting shops play a significant role in funding British racing, with BHA chief executive Brant Dunshea saying the sport receives almost a third of its £350 million annual income from betting through high street outlets.
While Dunshea acknowledged that the Government had “rejected a worst-case scenario”, he warned that the decision could still lead to “the closure of hundreds, if not thousands, of betting shops across the country”.
Analysis from Regulus Partners suggests half of Britain’s betting shops could close over the next four years.
Dunshea warned that the consequences could extend to prize money, racecourse viability, jobs and horse welfare projects.
He also highlighted the impact on fans, noting that for a significant part of racing’s audience, “a visit to their local bookie is the primary way they engage with horseracing”.
The BHA said it would “urgently engage” with the Government to explore ways of reducing the impact.
What It Means for Racing Punters
Horse racing at online betting sites remain unaffected by the latest change, having also been protected in last year’s Budget.
Remote gaming duty rose to 40% in April 2026, while a new 25% remote betting rate is due to take effect in April 2027.
However, remote bets on UK horse racing are excluded, meaning the sport’s rate remains at 15% following its Axe The Racing Tax campaign.
This year’s increase affects a different part of racing’s income.
Industry & Political Reaction
The Betting and Gaming Council (BGC) expressed “deep disappointment and concern” over the increase, with chief executive Grainne Hurst citing EY modelling that suggests almost 9,000 jobs could be lost and nearly 1,000 betting shops and casinos could close or be put at serious risk under the 25% rate.
The BGC also warned that higher taxes on the regulated industry could make the illegal market more attractive.
Shadow sport and gambling minister Louie French echoed those concerns, saying the rise “will likely damage British racing, jobs, and sponsorship of sports”.
However, the Government argues that higher-rate machines are the products most associated with gambling harm.
The latest increase marks the second consecutive Budget to raise gambling taxes, although gambling shares rose on the day as investors viewed the 25% rate as less severe than feared.
