Gambling Tax and Horse Racing: What a Budget Rise Could Mean for the Sport

Next Wednesday, the Chancellor stands up to deliver the Budget. Racing people will be watching with their fingers crossed, we cover the contentious issue around Gambling Tax and Horse Racing.

Not the usual excitement of a big race day. This is about tax, and about whether a change aimed at one corner of the gambling industry could ripple out to the stables, racecourses and small businesses that make British racing what it is.

It is a topic where people hold strong views on both sides, so let’s lay out what is actually being proposed, who says what, and where the evidence is firm or uncertain.

A quick note before we begin: the details below are drawn from published reports and industry statements, and the Budget is yet to happen. Nothing here has been confirmed by the Treasury.

What Is Actually Being Proposed?

First, a correction to a common assumption. The idea currently being discussed is not a blanket tax rise across all gambling.

The focus is Machine Games Duty (MGD), the tax on gaming machines in betting shops, casinos and adult gaming centres. The standard rate is 20%. The Social Market Foundation, a think tank, published a report in June 2026 suggesting a higher rate for the riskiest category of machine, with 40% modelled. Reports this month say the government is considering doubling the rate, though the Treasury says tax decisions are for the Chancellor to announce at fiscal events. The Budget is due on 28 October.

For context, the last Budget already made big changes. From April 2026, Remote Gaming Duty (online casino-style games) rose from 21% to 40%. From April 2027, a new 25% rate applies to most remote betting. Bets on UK horse racing were deliberately excluded from that new rate, and the 15% rate on racing bets stayed put. The Treasury estimated those measures would raise £810 million in 2026/27, rising to £1.16 billion by 2030/31.

Why Would Machine Duty Affect Horse Racing?

It seems odd at first. If the tax falls on machines, why worry about gambling tax and horse racing?

The answer is the high street betting shop. Machines are a major source of income for many shops, and shops are a major source of income for racing. They contribute through the Horserace Betting Levy, which is based on betting on British racing, and through media rights payments for showing live pictures.

Racing Post reporting on analysis by Regulus Partners estimates each shop closure costs racing roughly £6,000 in levy, plus around three times that in media rights contributions. In other words, if machine income falls and shops close, racing loses revenue even though no tax has touched a racing bet.

That is why a tax on machines can reach a racecourse.

The Case Racing Is Making

The British Horseracing Authority (BHA) says racing supports around 85,000 jobs. That includes stable staff, trainers, jockeys, racecourse employees, vets, farriers, hauliers, and the many small businesses that serve them.

Racing’s leaders have put numbers on the risk:

• Regulus Partners forecasts a 40% rate could cost racing £92 million a year, around a third of its betting income, and that roughly 4,050 more shops could close. It also estimates 28,000 job losses across the sector.
• EY, in analysis for the Betting and Gaming Council (BGC), estimated 690 to 1,470 shop closures and a hit of up to £40 million to racing. That is lower than the Regulus figure, which shows how much depends on assumptions.
• Arena Racing Company chief executive Martin Cruddace has written to ministers warning of “considerable and irreversible damage” to horse and greyhound racing.
• The BHA’s new chair, Simon Cox, has said racing should ask for “a modicum of support” rather than approach government “with a begging bowl”, while making the economic case clearly.

There is a recent track record to point to. Over 600 betting shops have closed since last November’s Budget, which Racing Post reports has cost racing about £17 million in media rights and levy income.

Racing also has some good news to hold on to. The Levy was projected to reach £110 million in 2025/26, a post-reform high. But the Levy Board’s chief executive has said there is “significant concern” about the downward trend in turnover per race.

Where the Evidence Is Less Certain

A fair reading means noting what the industry’s forecasts rest on.

Forecasts are models, not facts. The gap between EY’s £40 million and Regulus’s £92 million is large. Both rely on how many shops are assumed to close and how customers behave.

The shop numbers are already falling. Betting shops were in decline before any new tax. So it is hard to separate cause and effect.

Some figures come from interested parties. The BGC represents operators, and Regulus’s work has been cited by industry. That does not make it wrong. It does mean the numbers deserve scrutiny.

The Black Market Question

One of the loudest warnings is that higher taxes will push people towards unregulated gambling.

Regulus argues around half of displaced machine revenue could move to illegal operators. The Levy Board has also pointed to rising black market betting as a long-term threat.

But the evidence is contested:

• The Gambling Commission has said it cannot yet produce a reliable estimate of the illegal online market’s size.
• Some estimates suggest around 91% of online gambling is still regulated. Other analysis shows black-market revenue growing faster than the regulated market in 2025.
• The SMF disputes the claim for machines in particular, saying there is little international evidence that higher taxes significantly drive illegal gambling, especially in land-based venues where unlicensed operations are harder to hide.

A fair summary: the online black market is a real and growing concern. Whether a machine duty rise would worsen it, particularly in physical venues, is far less settled.

The Case For Higher Machine Duty

It would be unfair to cover only one side. Supporters of a rise make serious arguments.

The SMF points to Gambling Commission data showing that 26.5% of casino machine players score as problematic gamblers, and 16.9% of fruit and slot machine players do, against 4.5% for gambling overall. It estimates machine-related harm costs the UK around £2.33 billion a year, including £669 million in direct public spending on health, housing, welfare and crime.

It also notes that almost half of licensed adult gaming centres sit in the most deprived 20% of neighbourhoods in Great Britain.

On revenue, the SMF suggests doubling duty on the riskiest machines could raise between £275 million and £458 million a year. It argues money not spent on machines would flow into other local businesses, and its modelling suggests that could create net jobs. A Survation poll for the SMF found 43% of adults supported higher taxes on high-street slot machines, with 11% favouring lower taxes.

Charities and campaigners add that treatment demand has risen sharply in recent years. And as the SMF puts it, the current structure “underprices the societal harm” of high-risk machines.

The BGC, for its part, says it “fundamentally oppose[s]” any rise, and has warned that up to 3,800 casino jobs could be at risk. Its chief executive, Grainne Hurst, put it simply: “You cannot tax a casino that has closed.”

Is There Common Ground?

Possibly more than the headlines suggest.

Almost everyone agrees that gambling harm is real and deserves serious action. Almost everyone also agrees that racing has real economic and cultural value, and that the government has already shown it understands that. Racing was exempted from the online betting rise, and the BHA has publicly thanked ministers for it.

The argument is over design. Can duty on high-risk machines go up without collateral damage to racing’s funding? Could a rise be paired with protection for the levy and media rights? Those are the kinds of questions policymakers will be weighing, and the answers matter to a lot of people.

What It Means for Racing’s Wider Community

Racing is not just racecourses and bookmakers. It is a web of small enterprises that depend on race days going well, from caterers and florists to tailors and milliners. This is where gambling tax and horse racing could have a wider, and not considered reach.

That includes us. At Grace & Dotty, we make and sell hats and country clothing for people heading to the races and at the Racecourses themselves, so we see how much a good race day means to the people who go and the businesses around them. Our view is simply that decisions like this deserve a close look at the knock-on effects, whichever side of the debate you are on.

What Happens Next

The Budget on 28 October will tell us a great deal. If machine duty rises, expect closely watched figures on betting shop closures, levy income and jobs over the coming year. If it does not, expect the debate to continue between gambling tax and horse racing, because the SMF and its supporters will keep pressing, and so will racing.

Either way, the evidence will keep developing. Read widely. Racing Post, At The Races and other racing publications cover this closely, as do the SMF, the BGC, the Gambling Commission and gambling-harm charities.

The sport has been running for centuries, and it has survived plenty of change. What matters now is that the decisions being made are properly informed, by all of the facts.