Investors in Britain’s gambling sector exhaled on Wednesday after a widely anticipated tax increase came in far below the doubling that had been feared by the industry.
Shares in Entain (ENT.L), the Ladbrokes parent, climbed 5% on the FTSE 250 Index, while Rank Group, which operates Mecca Bingo and Grosvenor Casinos, surged as much as 11% following the announcement.
Chancellor John Healey confirmed that machine games duty on stakes above £1 will increase from 20% to 25% starting in April, rather than the sharper doubling some analysts had braced for.
The levy is projected to generate £135 million for the Treasury in 2027-28, rising to a peak of £150 million the following year, according to government figures.
Despite the market relief, Entain described the decision as “another disappointing decision” and warned it would add approximately £25 million to its annual tax burden.
Chief executive Stella David did not hold back in her assessment, stating: “The previous gambling tax increases announced in November last year have already had detrimental consequences across the industry, with the effects being felt by employees, communities as well as customers.”
David added: “These additional tax changes will further compound that damage and push more people into the growing illegal market.”
The company said a combination of betting shop closures and cost-cutting measures would allow it to fully absorb the machine games duty increase by the close of 2028.
The gambling tax revenue forms part of a broader funding strategy underpinning a significant expansion of business rates relief for high street retailers and hospitality operators across England.
Healey raised the threshold for full small business rates relief from £12,000 to £18,000, with tapered relief now extending to £21,000 rather than the previous £15,000 ceiling.
As a direct result, roughly 70,000 additional businesses will be removed from the business rates system entirely, while around 110,000 will see their property tax bills reduced next year.
The Treasury calculated that 3,500 pubs, 3,900 restaurants, 2,200 cafes, and 1,700 hairdressers and beauty salons will qualify for full exemption under the revised thresholds.
Taken together, the package means half of all retail and leisure firms operating in England will no longer face any business rates liability at all.
The government also confirmed a real-terms freeze on business rates bills for qualifying properties across 2027-28 and 2028-29, offering further certainty for struggling high street operators.
Alongside the gambling levy, Healey turned to online marketplaces as a second revenue source, announcing that platforms including Amazon, eBay, Temu, and Shein will be held responsible for collecting VAT on UK business sales exceeding £90,000, effective from October next year.
Currently, the obligation to collect VAT applies only to overseas sellers, but some foreign companies have reportedly exploited shell companies registered in Britain to sidestep the requirement.
The crackdown on that loophole is expected to raise £165 million in 2027-28, climbing to £320 million by 2028-29 before settling back to around £265 million annually by 2031-32.
The government signalled it would continue examining whether the business rates framework could be restructured to place a heavier burden on online retailers specifically, without creating collateral costs for the broader retail sector.
