Machine Games Duty explained

What Machine Games Duty is

Machine Games Duty is a tax collected by HM Revenue and Customs on money taken by gaming machines that offer a cash prize, such as pub fruit machines, arcade reel machines, bingo hall cabinets, betting shop terminals and casino slots. It is worked out on net takings, which means what players put in to play, less what the machine pays back as winnings, including non-cash prizes. The figures on this page come from the government’s Machine Games Duty rates page (opens in a new tab).

It sits alongside the other land-based machine rules on our UK rules hub. Those rules decide what a machine can charge and pay; MGD decides how much of the money the machine keeps goes to the Exchequer.

Machine Games Duty rates and bands

The rate depends on what a game costs to play and, for the lowest band, the top prize. The rates are set in Schedule 24 to the Finance Act 2012, as substituted by section 124 of the Finance Act 2014 (opens in a new tab), and apply to machine games played on or after 1 March 2015.

Both conditions must be met for the 5% rate. A 10p game with a £20 top prize does not qualify for the lower rate, because its prize is too large, so it falls into the standard band.

Machines with more than one game

Many modern cabinets are multi-game machines. If any game on the machine falls into a higher band, the rate for that game applies to all takings from the machine. The government’s own example is a machine with five 20p games and one £6 game: the 25% rate applies to everything, so net takings of £400 produce £100 of duty.

How Machine Games Duty bands line up with machine categories

The duty bands and the gaming machine categories are separate systems, but because categories cap stakes and prizes, you can see roughly where common machines land. This table uses the category limits from the gaming machine categories page (opens in a new tab) and checks them against the duty bands; a machine’s actual band depends on the games it offers.

With the maximum stake on a Category B1 casino machine set at £5, and no Category A machines currently permitted, most machines in British venues fall into the 5% or 20% bands. For other Category D subtypes, such as crane grabs and pushers with non-cash prizes, check HMRC guidance rather than assuming a band.

How to calculate Machine Games Duty on a machine

The calculation follows the same order whatever the venue:

1. Add up everything players paid to play the machine in the accounting period.
2. Subtract everything the machine paid out as winnings, including the value of non-cash prizes. The result is net takings.
3. Find the highest-rated game the machine offers, using the cost-to-play and prize tests.
4. Apply that rate to the machine’s whole net takings.
5. If the rate changed part-way through the period, split the takings: the old rate applies before the change and the new rate after, apportioned on a just and reasonable basis where the split is unclear.

Worked example: a pub fruit machine

A Category C machine in a pub takes £3,000 from players over an accounting period and pays out £2,100 in prizes. Net takings are £900. Its games cost up to £1, so the standard rate applies: 20% of £900 is £180 of duty, leaving £720 before any other costs of running the machine.

Worked example: a 10p arcade reel machine

A money-prize Category D machine (10p a go, £5 top prize) takes £1,000 and pays out £800. Net takings are £200. Every game meets both type 1 tests, so the lower rate applies: 5% of £200 is £10.

Who pays Machine Games Duty: venues, not players

MGD is paid by the business responsible for the premises or machines, on net takings. Players do not pay it, it is not deducted from a prize, and it does not appear on the machine. If you win £100 on a pub fruit machine, you receive £100; the duty is worked out later on the machine’s overall takings.

Players in the UK also pay no tax on gambling winnings. Our page on tax on slot winnings explains that position, and the online counterpart of this tax is covered in Remote Gaming Duty and slots.

The cost of play to you is shown by the machine’s return to player figure, not by the duty rate. A machine displaying 80% returns an average of 80p per £1 staked over the long run; the duty comes out of the remaining 20p that the machine keeps.

What Machine Games Duty does not cover

The government’s guidance says the duty does not apply to takings from:

• charity events;
• tournaments;
• lottery machines;
• machines used for domestic purposes.

The domestic exemption is relevant to collectors; our guide to home slot machines and the law covers owning a machine privately. MGD also has nothing to do with online slots, which fall under Remote Gaming Duty.

Does Machine Games Duty change what a machine pays out?

Not directly. There is no legal minimum RTP for any machine category, and the rate of duty does not set or change a machine’s payout percentage. The RTP is chosen by the supplier and operator within what the game allows, and Categories B1 to B4 and C must display their theoretical target RTP so you can see it before you play. Our explainers on payout percentages in the UK and the house edge show how to read those figures.

What duty does affect is the economics of running machines. A venue keeps net takings minus duty, minus any share owed to a machine supplier. For the wider reasons a pub may or may not carry a machine, see why some pubs have no slot machines.

Machine Games Duty and the 2025 Budget gambling changes

The government’s gambling duty changes (opens in a new tab) published on 26 November 2025 raised Remote Gaming Duty from 21% to 40% from 1 April 2026, abolished Bingo Duty from the same date and created a 25% rate for remote general betting from 1 April 2027. MGD was not mentioned, and section 124 of the Finance Act 2014 on legislation.gov.uk still showed the 5%, 20% and 25% rates on 21 October 2026.

Trade press in September 2026 reported a think-tank proposal to raise MGD on Category B machines from 20% to 40%. That is a proposal only. The government had made no decision, and nothing on this page should be read as a forecast.

Machine Games Duty timeline

Machine Games Duty across UK venues

Every type of venue with cash-prize machines is in scope: pubs, casinos, betting shops, adult gaming centres, bingo halls, clubs and arcades. What changes from venue to venue is the mix of categories and therefore the mix of bands. A seafront arcade with many 10p reel machines may have much of its machine income in the 5% band, while a betting shop’s B2 and B3 terminals sit in the 20% band.

Machine Games Duty versus online slots duty

Online slots are taxed differently: operators pay Remote Gaming Duty on their gaming profits, at 40% since 1 April 2026. For players nothing changes at the point of play, and winnings are not taxed either way. Coral Casino and Ladbrokes Casino are both run by LC International Limited (Entain), so one person may not be able to claim new-customer offers at both: check the terms.

Coral gives new players aged 18+ 100 free spins (10p each, selected games) for depositing and betting £10 on slots during 1 October 2026 to 1 February 2027; accept within 48 hours, use within 7 days, no wagering on winnings. Ladbrokes gives new customers who deposit and spend £10 on slots 50 free spins a day for 10 days, up to 500 at 10p each, claimed before 23:59 daily and valid 7 days, with no wagering. Some deposit methods, such as PayPal and prepaid cards, don’t qualify. 18+, terms apply.

18+. Gambling should be entertainment that costs money, not a way to make it. Decide a budget before you play: plan a slot budget. Free, confidential help: National Gambling Helpline 0808 8020 133.