Machine Games Duty cannot be set by premises, and gambling stakes stay in the VAT base #2622

Split from #2586. #2590 completed it for the duty rates and the household inputs. Two of the changes #2586 proposed are still open.

1. Machine Games Duty by premises

What the engine does today

Since #2590, machine_games_duty charges Machine Games Duty on three household inputs, one per statutory machine type (Finance Act 2012, Schedule 24, paragraphs 5, 6 and 9):

• machine_games_lower_rate_net_takings at 5%;
• machine_games_standard_rate_net_takings at 20%;
• machine_games_higher_rate_net_takings at 25%.

Nothing records where a machine is: a betting shop, an adult gaming centre, a bingo hall, a family entertainment centre, a pub or club, or a casino. So a reform that changes the rate in some premises only cannot be expressed. docs/engineering/gambling-duties.md says a reform targeting betting shops "needs a separate evidenced allocation of each tax class's net takings by premises".

Why it matters

For Autumn Budget 2026, a Machine Games Duty rise from 20% to 25% on gaming machines in betting shops is reported to be under consideration. The report is in The Times, 21 October 2026, as reported by the Racing Post. The engine can raise the standard rate for every machine of that type, but not for betting shops alone.

Proposed change

• Net takings by machine type and premises. Either household inputs for each type and premises, or the three type inputs plus parameters that split each type's takings across premises.

• A rate parameter for each premises group that defaults to the statutory rate, so that a betting-shop rate can be set on its own.

• Data. The split has to be joint by type and premises. Add the seven-family gambling-duty engine foundation #2590's docs explain why: premises shares alone do not identify it, and machine counts are not yield weights. Sources to check:

  • the Gambling Commission's industry statistics, for machine GGY by sector and machine numbers by category;
  • HMRC's Machine Games Duty liabilities by rate, in Table_2_MGD of the betting and gaming tables.

  UK excise facts for alcohol, tobacco and gambling: the OBR duty and clearance lines already archived, the revised Consumer Trends release, Gambling Commission GGY and HMRC betting and gaming receipts (PolicyEngine/microcosm#1359) chronicle#381 requested the Gambling Commission and HMRC tables.

• Open question carried over from Gambling duties are not modelled: add the betting, gaming, machine and lottery duty rates and the gambling losses to charge them on #2586: does the premises split belong in the engine or in the data?

2. Gambling stakes in the VAT base

What the engine does today

Gambling is exempt from VAT: VAT Act 1994, Schedule 9, Group 4, "Betting, gaming, dutiable machine games and lotteries".

• Gambling stakes (COICOP 09.4.3) sit inside recreation_consumption, and so inside consumption.
• full_rate_vat_consumption is consumption × full_rate_vat_expenditure_rate.
• Microcosm imputes that rate from the ETB as the standard-rated share of each donor's expenditure after VAT (UK ETB VAT: the full-rate VAT expenditure rate leaves [0, 1] (uk-data#572's ETB half) microcosm#1225).

So the exemption reaches a household only through its imputed rate, not through its own stakes.

#2590 left the VAT base unchanged. Its gambling inputs are net losses (stakes less winnings) and lottery ticket spending, which are a different base from the gross stakes inside recreation_consumption. Subtracting one from the other would mix bases.

Proposed change

• A gross-stakes household input. Once UK: impute alcohol, tobacco and gambling consumption so policyengine-uk's excise duties stop scoring zero microcosm#1359 draws gambling stakes as their own column, add an input for stakes before winnings, which sit inside recreation_consumption.
• Take stakes out of the VAT base, and redefine the rate to match. full_rate_vat_expenditure_rate would become a share of expenditure excluding stakes, so the exemption is not counted twice. Whether that is needed depends on whether the ETB share's denominator includes stakes. The rate is defined in Microcosm's ETB stage, so the two repositories change together.
• Keep the duty bases separate: net losses for the betting and gaming duties, and ticket spending for Lottery Duty.

Blocked on

• Premises split: joint machine type × premises takings, from the Gambling Commission and HMRC sources above.
• VAT base: a gambling stakes column from UK: impute alcohol, tobacco and gambling consumption so policyengine-uk's excise duties stop scoring zero microcosm#1359. Its planning item "The gambling mapping, once policyengine-uk settles its inputs" can go ahead now that Add the seven-family gambling-duty engine foundation #2590 has merged.

Related

• Gambling duties are not modelled: add the betting, gaming, machine and lottery duty rates and the gambling losses to charge them on #2586, completed by Add the seven-family gambling-duty engine foundation #2590.
• Review and refresh the household casino-duty incidence proxy #2587, the review of the household casino-duty incidence proxy.
• UK: impute alcohol, tobacco and gambling consumption so policyengine-uk's excise duties stop scoring zero microcosm#1359 and UK excise facts for alcohol, tobacco and gambling: the OBR duty and clearance lines already archived, the revised Consumer Trends release, Gambling Commission GGY and HMRC betting and gaming receipts (PolicyEngine/microcosm#1359) chronicle#381.
• Roadmap: complete, interaction-aware UK tax–benefit coverage (2000-onward) #1775. Its Workstream C list of excise duties does not mention gambling yet.