A proposed increase in Machine Games Duty could put £92 million of annual British racing income at risk. Regulus Partners also forecasts that as many as 4,000 betting shops could close by 2029.

The modelling was published on October 5, 2026. It adds a sharp financial warning to the debate over a possible 40% MGD rate. The figure is a consultancy forecast, not enacted government policy.

The forecast for betting shops

Regulus Partners says doubling MGD to 40% could make many betting shops unprofitable. Its modelling estimates:

  • About 1,500 shops could become loss-making immediately.
  • A further 1,000 could reach that point within two years if revenues remain flat and fixed costs rise.
  • As many as 4,000 shops could close within three years without measures to offset the tax increase.
  • Roughly 1,500 shops could remain open across Great Britain.
  • An average betting shop could face about £45,000 in additional annual costs.

Regulus says the extra burden could remove the free cash flow needed to keep weaker premises open. The closure forecast depends on the policy being introduced and the wider assumptions in the consultancy's model.

Why racing could take the hit

Betting shops help fund British racing through media rights payments and the statutory Horserace Betting Levy. Regulus estimates that racing could lose about £92 million a year if the predicted closures occur.

That would equal roughly one-third of racing's betting-related income. The British Horseracing Authority said the risk could affect prize money, Levy funding, equine welfare and veterinary research.

The BHA also says British racing supports about 85,000 jobs. Those figures form part of the authority's response to the modelling. They are not an independent government impact assessment.

The dispute is not only about the tax paid on machines. It is about whether the wider betting-shop economy remains strong enough to keep funding racing.

Could the Treasury collect less?

Regulus forecasts a potential 32% fall in MGD receipts if the projected closures occur. It puts annual receipts under that scenario at about £155 million.

That would challenge the idea that a higher tax rate would automatically raise more money. Closures could also reduce employment, business-rate receipts and spending on local high streets.

A separate estimate from EY, cited by the Betting and Gaming Council on September 28, said a 40% MGD rate could put at risk:

  • Up to 16,000 jobs.
  • Nearly 1,500 betting shops.
  • As many as 34 casinos.

That industry-commissioned estimate should not be confused with the Regulus forecast. The two analyses use different assumptions and produce different projections.

What the rules say now

HM Revenue and Customs currently sets MGD at three rates:

  • 5% for lower-rate machines.
  • 20% for standard-rate machines.
  • 25% for higher-rate machines.

The duty applies to net takings from dutiable machine games. That means the amount taken after winnings have been paid.

The 40% figure discussed by Regulus is therefore a proposed change. Separate gambling-duty reforms have already raised Remote Gaming Duty to 40% from April 1, 2026. They also introduce a new 25% rate for remote betting from April 1, 2027.

Those measures apply to remote gambling. They are separate from the proposed MGD increase affecting machines in land-based venues.

The decision ahead

The Chancellor's autumn Budget is expected in October 2026. Until legislation is introduced and approved, the 40% MGD proposal remains a policy option rather than a final tax rule.

The practical question for ministers is whether higher receipts from surviving machines would outweigh lost duty, business rates, employment and racing income after closures.

Regulus says the numbers point to a serious risk that the tax increase could shrink the base it is meant to tax. The final impact will depend on the rate adopted, the timing and any measures introduced to protect vulnerable shops and racing income.