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Taxing Gambling Machines To Enhance Public and Private Revenue

Garrett, Thomas A.; Paton, David; Vaughan Williams, Leighton

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Thomas A. Garrett

Leighton Vaughan Williams


Electronic gambling (‘slot’) machines are a key component of the global gambling industry. We introduce a theoretical framework which shows that under reasonable assumptions, shifting from a per-machine licence fee to a gross profits tax (GPT) on machine revenue can help to resolve policy tensions between industry profitability, economic growth and government revenue. We test the theory using data on recent changes to gambling taxation in the UK, in particular the move to a gross profits-based Machine Games Duty (MGD). Our results reveal that the shift from licence fees to a revenue-neutral MGD led to a significant increase in the number of machines, as predicted by the theory, and in machine revenue. These results provide useful guidance for all parties involved in the gambling taxation debate, especially those jurisdictions that are considering or are open to a change to their gambling tax system


Garrett, T. A., Paton, D., & Vaughan Williams, L. (2020). Taxing Gambling Machines To Enhance Public and Private Revenue. Kyklos, 73(4), 500-523.

Journal Article Type Article
Acceptance Date Dec 2, 2019
Online Publication Date Jul 28, 2020
Publication Date 2020-11
Deposit Date Dec 16, 2019
Publicly Available Date Jul 31, 2020
Journal Kyklos
Print ISSN 0023-5962
Electronic ISSN 1467-6435
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 73
Issue 4
Pages 500-523
Keywords gambling; taxation; slot machines; gross profits tax
Public URL
Publisher URL


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