The Social Market Foundation, a UK think tank, released a report this Tuesday urging the government to significantly increase the Machine Games Duty on Category B gaming machines in the upcoming budget. The core argument of the report directly points to the current unified tax rate of 20% as severely underestimating the social harm caused by high-risk machines, proposing a separate tax bracket for Category B machines, with the tax rate doubling from 20% to 40%—aligning with the remote gambling tax rate set for 2025. The industry organization, the Betting and Gaming Council, strongly opposes this, warning that it would destroy high street gambling venues and result in tens of thousands of job losses. A more alarming estimate from the third-party consulting firm Regulus Partners suggests that about seventy percent of betting shops would be forced to close under the new tax rate. PASA's official website notes that this debate around "how much tax should gambling machines pay" actually opens up a more fundamental question—whether tax tools are suppressing harm or creating unemployment and a black market.
The harm bill for Category B machines: 26.5% of users already have problems
Gideon Salutin, Chief Economist at SMF, and Senior Research Fellow Richard Hyde cited data from the Gambling Commission as the starting point for their argument. The data shows that the severe problem gambling index score for casino machine users is "problematic" at a rate of 26.5%, fruit machine/slot machine players at 16.9%, while the average level for all gambling activities is only 4.5%—the concentration of harm from machine-based gambling far outpaces other categories.
Geographically, the issue is even more challenging. Adult gambling centers in the UK hold 42% of electronic gambling machines, with revenue in the fiscal year 2023-24 growing 11% to about £623 million. The report points out that these venues and betting shops are highly concentrated in the poorest communities—nearly half of the licensed adult gambling centers are located in the poorest 20% of areas nationwide, and their numbers are still steadily increasing. SMF's estimates show that the annual economic loss caused by machine-related gambling harm is as high as **£2.33 billion**, of which the direct fiscal costs involving welfare, housing, crime, and medical services reach **£669 million**.
SMF's logic chain is clear: since the establishment of MGD in 2013, the 20% unified tax rate has never played the "price-tax linkage" regulatory function that a consumption tax should have. Since the remote gambling tax is set to increase from 21% to 40% in 2025 based on harm standards, the same logic should extend to offline machines.
From a revenue perspective, SMF estimates that doubling the Category B machine tax rate to 40% could increase fiscal revenue by **£275 million to £458 million** annually, depending on whether player behavior contracts due to price increases—the lower limit assumes unchanged consumption volume, the upper limit assumes some players reduce betting. For every 5 percentage point increase in the tax rate above 20%, an additional **£51 million to £114 million** in revenue is expected.
The industry's calculation: 70% of shops close, 40,000 jobs lost
The Betting and Gaming Council completely disagrees. Their spokesperson's wording is unequivocal: "We fundamentally oppose any rise in machine game taxes, and there is nothing in this report that justifies such a destructive policy." BGC emphasizes the social role played by bingo clubs, betting shops, casinos, workers' clubs, and miners' welfare clubs in local communities, warning that higher tax rates will lead to venue closures, massive unemployment, and high street decline.
But this is just the appetizer. Regulus Partners' estimates are even more shocking: about 70% of betting shops will be forced to close, equivalent to about 4000 of the 5500 stores nationwide disappearing; the situation for adult gambling centers is even worse, with about 90% ceasing to exist, leaving only about 150 of the 1450. Even if the average revenue of surviving venues doubles, the overall Category B machine revenue will still shrink significantly—from **£1.2 billion to £600 million** for betting shops, from **£550 million to £115 million** for adult gambling centers.
The result is that although the tax rate has doubled, the tax base has also collapsed. Regulus judges that applying a 40% tax rate to a significantly reduced revenue base, the final total tax revenue might be the same or even lower than the current level. The impact on the employment level is also not to be ignored—up to 43,000 direct jobs might be cut, and the closure of betting shops could also lead to a reduction in media rights fees and gambling tax revenue for the British horse racing industry by about **£100 million**.
What happens after gambling expenditures shift?
SMF also constructed a "consumption shift" model in the report to respond to the store closure warnings. Their assumption is that after a reduction in gambling expenditures, the purchasing power will not vanish into thin air but will flow to non-gambling industries such as retail and hospitality, thereby stimulating net job growth and overall added economic value. Based on a scenario of a 10% reduction in gambling expenditures, it could create 24,000 net jobs and increase the overall economic added value by about £311 million. Since non-gambling industries generate higher tax revenue per million pounds of turnover than the gambling industry, the overall revenue for the Treasury might even increase instead of decrease.
This deduction sounds logically consistent, but the premise is that the consumption shift really occurs along the paths envisioned by the model—in actual economic behavior, whether the purchasing power consumed by gambling machines can smoothly switch to retail and dining involves too many uncertain variables.
On the issue of the black market, SMF's disagreement with the industry is equally sharp. Regulus estimates that about half of the gambling machine revenue squeezed out of legal channels will flow into the black market. SMF counters by saying that offline illegal operations are harder to conceal than online ones, and cross-national data does not support a clear correlation between remote gambling tax rates and the size of the black market. A poll in April 2026 provided SMF with public opinion ammunition—43% of respondents support taxing "high street betting shop slot machines" more, with only **11%** advocating for lower taxes.
PASA's official website believes that the most valuable output of this debate is not the conclusion of either side, but the huge discrepancy between the two sets of calculations itself. SMF sees the monetization of harm and optimization of consumption structures, the industry sees a shrinking tax base and employment cliff, and policymakers face a question harder than who calculates more accurately: where is the balance between suppressing harm and not creating new harm?
————
This article is from "PASA-Global iGaming Leaders," a gambling industry news channel: https://t.me/pasa_news
Original in-depth gambling channel: https://t.me/gamblingdeep
Free data reports: @pasa_research
PASA Matrix: @pasa002_bot
PASA official website: https://www.pasa.news
