British racing warns of £57m annual funding hit after MGD rise

British horseracing could lose up to £57m a year. This is following the government’s decision to increase Machine Games Duty (MGD). It prompts warnings over prize money, racecourse finances and employment.

The British Horseracing Authority (BHA) said the tax change could accelerate betting-shop closures. This would reduce the payments that help fund the sport. Chief executive Brant Dunshea warned that the consequences could also affect horse welfare projects and research.

Betting-shop closures threaten racing income

The Budget confirmed that MGD will increase from 20% to 25% from 1 April 2027 for machines with a maximum charge to play above £1 or a maximum prize above £100.

Although the government rejected calls for a 40% rate, the BHA said the smaller increase would still place substantial pressure on bookmakers’ retail operations.

Betting shops contribute to racing through statutory levy payments and commercial agreements covering media rights. A smaller retail estate could therefore weaken an income stream supporting racecourses and the wider sport.

According to the BHA, high-street betting accounts for nearly a third of the approximately £350m that racing receives annually from betting. The authority cited independent modelling shared with the Treasury before the Budget to support its potential £57m annual loss estimate.

Forecasts depend on scale of closures

The £57m figure shows the potential future impact. It isn’t an immediate reduction in racing’s funding.

Regulus Partners’ modelling points to that annual loss developing over four years. Separate work undertaken for the Betting and Gaming Council puts the potential reduction in levy and media rights payments at £15m, illustrating the different assumptions surrounding future shop closures.

Bookmakers have already begun assessing their response. Entain estimates that the MGD increase will add approximately £25m to annual costs in its UK and Ireland retail business before mitigation.

The Ladbrokes and Coral owner expects to offset the impact by the end of 2028 through changes to its shop estate, operational efficiencies and potential market share gains.

BHA seeks government talks

“While the MGD rate increase is not as severe as some called for, this change could still prove devastating for the future of our sport.” - Brant Dunshea, BHA chief executive

Alongside the financial risks, he said closures could weaken racing’s connection with fans who primarily follow the sport through visits to their local bookmaker.

The BHA intends to seek urgent discussions with the government about reducing the policy’s impact. It will also examine the wider Budget documents for other measures affecting racing.

The main concern for the sport is how pressure on gaming-machine revenues could translate into fewer betting shops and lower financial contributions to racing itself.