Industry body the Association of Licensed Multiple Retailers (ALMR) had raised concerns that the machines could be included under the legislation, which scrutinises gambling providers, as part of a Government review.
However, the Treasury said that pubs will not be forced to adhere to these rules or the associated costs, which were described as “totally disproportionate and extremely unhelpful” by ALMR chief executive Kate Nicholls.
A Treasury spokesperson said that it had come to the conclusion that there was a low risk of gaming machines in pubs being targeted.
“The Government recognises that there are some money laundering risks associated with the gambling industry.
“However, the evidence shows that gaming machines in pubs are low risk and as such we have decided not to include them within the updated money laundering regulations,” they told The Morning Advertiser.
Nicholls said: “This is a welcome, common sense approach from the Government and will help to ensure that pubs are not burdened with unnecessary costs.
“Any removal of the exemption for pubs would have seen them incur a cost for amusement machines which would have been completely incongruous.
“Money from machines makes a valuable contribution to pub turnover, but it is not an enormous amount, around 1% according to the latest ALMR/Christie & Co benchmarking report.”
Pubs were initially exempt from the regulations in 2007, but the Government has been undertaking a review, which could have resulted in pubs being subject to the same rules as casinos.
The Treasury had been running a consultation to see what parts of the money laundering law should be changed and what should be kept. The ALMR responded to the consultancy urging the Treasury to keep the exemptions for pubs in place.
“The cost to low-risk businesses of complying with the regulations would almost certainly eclipse any revenue, let alone profit, that could be earned by the machines, the ALMR wrote in its consultation response.
“Income from gaming machines represents a small but significant part of pubs' and other licensed premises' income – 0% to 2.5% of revenue, varying by trading style – and presents a minimal risk of money laundering.” it concluded.
The British Beer & Pub Association (BBPA) has welcomed the result of the Money Laundering Regulations 2017 consultation.
Brigid Simmonds, BBPA chief executive, said: "Pubs are already dealing with huge increases in taxes and costs this year, especially from business rates and the rise in beer duty in the Budget.
“Pubs are very much a soft-gaming environment, so this was a sensible decision.”