The Social Market Foundation (SMF), an influential UK thinktank, is set to release a report calling for a 40% Machine Games Duty on Category B gaming machines.
The proposal would double the existing tax rate on Category B machines from 20% to 40%, targeting devices that include Fixed Odds Betting Terminals with a £2 maximum stake and £500 top prize.
The SMF has previously influenced UK gambling tax policy, having helped convince the Government to hike online casino and sports betting taxes in the 2025 Budget alongside the Institute for Public Policy Research.
The thinktank claims the proposed duty increase could raise between £275m and £458m for the Treasury, though critics note the higher estimate assumes zero impact on supply or consumer behaviour.
Industry expert Dan Waugh of Regulus Partners warned the proposals could devastate the land-based gambling sector, including betting shops, bingo clubs, casinos, and Adult Gaming Centres.
Waugh said: “These businesses are already struggling with significant inflationary cost pressures. Energy costs have gone through the roof, labour costs are higher than ever. They’re already facing massive inflation day-to-day, and the SMF now wants to double the amount of duty they pay — it’s just not survivable for the vast majority of businesses.”
The Betting and Gaming Council (BGC) strongly opposed the proposal, warning that any Machine Games Duty increase would put venues and jobs at risk while pushing customers toward illegal gambling markets.
A BGC spokesperson said: “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.”
The SMF recommended exempting Category C machines, typically found in pubs with a £1 maximum stake and £100 prize limit, from the proposed tax changes to protect the hospitality industry.
Waugh suggested the decision to exclude Category C machines may have been a deliberate move to avoid opposition from the powerful pub lobby, which could otherwise block the reforms in Westminster.
A Survation poll commissioned by the SMF found that 43% of UK adults support increasing taxes on slot machines in betting shops, compared to just 11% who wanted them reduced.
The proposals may find a powerful political ally in incoming Prime Minister Andy Burnham, who criticised Category B machines and Adult Gaming Centres during his time as Manchester Mayor.
SMF chief economist Gideon Salutin 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 SMF argued that harms linked to machine gaming create economic losses worth £2.33bn, though Waugh challenged the methodology used to reach that figure as unreliable and misleading.
He also noted that evidence suggests the gambling survey underpinning the analysis overstates participation in some activities by as much as 694%, raising serious questions about the report’s core assumptions.
The renewed focus on FOBTs echoes one of the gambling reform movement’s most notable earlier victories, when the maximum stake on the machines was reduced from £100 to £2, coming into force in April 2019.
