Just under three months after HM Treasury implemented the first of two major tax hikes on gambling, the Social Market Foundation (SMF) think tank has made the case for another increase in gaming duties.
The industry is now subject to a 40% tax on online gaming and from next year will see General Betting Duty (GBD) increase to 25%. Breaking down the think tank’s latest proposal for SBC News, Jake Pollard takes a look at the Foundation’s rationale, and the pushback from an industry which already feels hard pressed by tax burdens…
The SMF’s latest proposals to raise Machine Games Duty (MGD) on the Category B slot machines found in UK betting shops, gaming arcades and bingo halls has been criticised by industry analysts and stakeholders as being “politically influenced” and questions linked to the SMF’s use of statistics and data have also been raised.
The report came out this morning (Tuesday 30 June) and calls for tax rises on the revenues operators make from the machines, which are also called electronic gaming machines (EGMs) and are found up and down UK high streets and gaming venues and allow payouts of up to £500.
The machines are currently taxed at 5% on stakes of up to 20 pence, 20% on stakes of up to £5 and 25% on those over £5, with the SMF proposing a “targeted” raise up to 40% on the machines. The SMF said “lower risk Category C machines, typically found in pubs, would remain at 20% and lower-stake devices at 5% (to) insulate the hospitality industry entirely”.
The higher tax rate on the ‘Cat B’ machines could bring in between £275m-£458m in additional tax revenues, according to the SMF, which added that 43% of UK adults believe the government should increase its tax take on the machines, against just 11% who want them cut, according to a poll of 2,047 people by Survation for the SMF.
Gideon Salutin, Chief Economist at the SMF, said: “Our modelling shows that raising Machine Games Duty is one of the few tax rises that would actually improve the public finances twice over – once through higher receipts from the machines themselves, and again as spending shifts to sectors that generate more jobs and more tax revenue per pound.
“The way we’ve set it out ensures that tax is raised only on the most harmful type of slot machines, while insulating the hospitality industry entirely.
“The public clearly understands this. When a plurality of supporters of every national political party back a tax rise on these machines, it’s a mandate for reform that shouldn’t be ignored by the Chancellor. Especially given that the Chancellor has already established that taxes should be raised in line with associated harms in the previous Budget.”
As with the think tank’s case taken up by the likes of Gordon Brown last year, however, the SMF”s case for increasing MGD has its detractors and critics.
Dan Waugh, partner at Regulus Partners, questioned the SMF’s calculations and how it reached its conclusions.
The sample size of just over 2,000 respondents to its survey was “a fairly thin basis for enacting policy, given that most adults in Britain don’t play machines and so would not be adversely affected”, he told SBC News.
Waugh added that it was “unlikely that Survation would have explained to them the potential consequences of a tax rise (such as closures of bingo clubs)” and that it “would be interesting to obtain a copy of the survey questionnaire as the framing of the question can influence how people respond”.
The industry’s trade body in the UK, the Betting and Gaming Council (BGC), that “we fundamentally disagree with any proposal for an increase in Machine Games Duty”.
“Betting shops, bingo clubs and casinos support local jobs, help keep high streets alive and provide valued community spaces for millions of adults. A further increase in Machine Games Duty would put venues and jobs at risk while driving more customers towards the growing illegal gambling market.
“Tax policy should be evidence-led and proportionate, recognising the pressures facing businesses across the regulated betting and gaming sector.”
Political plays
Referring to the call to raise MGD, Waugh noted that in 2025 the SMF “called for duty rises on remote gambling, but then ‘threw in’ MGD while giving evidence to the Treasury Select Committee”, while its latest call also “continues a policy of seeking to neutralise politically influential groups”.
Noting that the Department for Culture, Media and Sport (DCMS) expressed serious misgivings about the SMF’s modelling last year, Waugh said that “in 2020, the SMF called for betting duty for online operators to increase from 15% to 21% (including for horse racing).
In 2025, it called for a larger increase (to 25%), but with a carve-out for racing”, which the UK government pushed through as part of its 2026 Budget.
In this latest call, the SMF has exempted Category C machines (found in pubs and social clubs) from their proposed tax hikes and “is explicitly seeking to insulate the hospitality industry”, noted Waugh.
The SMF estimated that “the harms associated with machine gaming create economic losses worth £2.33bn, including fiscal costs worth £669m through welfare, housing, crime, and health payments” and called on MGD to be based on the “associated harm” rather than on stake limits, as is done currently.
Stats misuse
However, Waugh said the £2.3bn estimate was calculated by uprating the Office for Health Improvement and Disparities’ (OHID) 2023 cost estimates by replacing the NHS’ UK Health Survey estimates of problem gambling with those from the Gambling Survey for Great Britain, “which is effectively a subset of the analysis it included in its 2024 and 2025 tax papers”.
Waugh added that the methodology was problematic for a variety of reasons. “The OHID figures do not represent costs of problem gambling. Instead, they are costs associated with problem gambling. The Director-General of the OHID has claimed that it was never his department’s intention to suggest that these costs might be the result of problem gambling.”
In addition, in 2025 “the Office for Statistics Regulation wrote to the SMF to warn it that its characterisation of costs was mistaken,” noted Waugh.
“The DG of the OSR has also written to the chief economist at the Department of Health and Social Care to ask for clearer warnings to be included on the OHID report. Having been written to by the OSR in 2025, the SMF has repeated its error in this latest report and is misusing OHID estimates.”
In its statement, the SMF said Category B machines are often located in adult gaming centres (AGCs) that “are disproportionately in less well-off parts of the country” and that 47% of the UK’s 1,400 AGCs in “are situated in the 20% most deprived areas”, but Waugh noted that EGM players who are problem gamblers also participate in many other gambling activities.
“To attribute the entire associated cost to EGMs is wildly speculative.”
One industry source commenting on condition of anonymity was blunt in their assessment: “This so-called charity is producing back of a fag packet calculations to defend a political hit job – a 100% tax rise that could hammer bookies, bingo halls and working men’s clubs across the country. They’re fast losing credibility.”
SBC News asked the SMF to comment on the points raised by Waugh but hadn’t received a reply at the time of writing.
