The think tank eyes gaming machines as source of additional revenue and claims any drop in gambling will make people more productive
A proposal to raise machine games duty in the United Kingdom has been met by widespread criticism for being ill thought out.
British think tank Social Market Foundation (SMF) has released a report which proposes that the UK government double Machine Games Duty (MGD) on Category B machines.
The proposal is to raise the duty to 40 per cent of gross gaming yield in the Autumn Budget and is justified by a number of dubious assertions.
SMF claims that gaming machines are designed to encourage repeat and risky play and suggests that 17 per cent of fruit or slot machine users gamble at risky or harmful levels.
The proposal cites SMF modelling which showed that the harms associated with machine gaming led to economic losses of £2.33 billion last year through fiscal costs, welfare, housing, crime, and health payments.
Estimating the total number of gaming machine customers with problematic gambling at 317,950, this suggests an economic cost of £6,264 per person.
SMF reaches this economic cost total by assuming that any shift from gambling to other forms of expenditure would have a positive economic impact, suggesting that a 10 per cent decrease in gambling expenditure would create 24,000 new jobs.
SMF also claims that gambling tends to impair productivity and says that a 10 per cent decrease in gambling would likely increase the UK’s Gross Value Added by £311 million.
The proposal estimates that doubling MGD to 40 per cent would bring in between £275 million to £458 million in additional revenue with little risk of players migrating to the online black market.
Migration to the legal online market would be welcomed by SMF because it is already taxed at 40 per cent. The Foundation also believes that online slots are safer than land-based machines due to their numerous safer gambling tools.
Another justification for the move against gaming machines is the often-repeated claim that areas with higher numbers of gaming machines are typically places of greater socioeconomic distress.
This ignores one of the basic principles of retail, which is to be where your customers are.
Full-scale casinos, as with designer clothes shops, have a higher prevalence in areas of socioeconomic affluence. Low-cost adult gaming centres serve a different segment of the UK population but this is overlooked.
The proposal also takes aim at bingo halls, which are similarly located in less affluent areas and also provide access to gaming machines.
The report acknowledges that SMF does not know how operators would respond to a tax increase.
On the subject of value added tax, SMF accuses adult gaming centres of having an unfair advantage over other sectors because they do not pay VAT. It ignores the fact that they are also unable to reclaim VAT on their expenses.
Britain’s Betting and Gaming Council, which represents some of the leading licensed operators, said it was fundamentally opposed to any increase in MGD, noting that nothing in the SMF report justifies such a damaging policy.
“Bingo clubs, betting shops, casinos, working men’s clubs and miners’ welfare clubs play an important role in communities across the country. The regulated betting and gaming sector supports around 109,000 jobs, contributes billions to the UK economy and provides valued leisure venues for the millions of adults who enjoy betting safely and responsibly,” said the BGC.
“Doubling Machine Games Duty would not protect those communities. It would force venue closures, cost jobs and weaken high streets, while benefiting only the growing illegal gambling market, which pays no tax, contributes nothing to local communities and offers none of the consumer protections found in the regulated sector.”
The BGC also criticised SMF for failing to quantify the venue closures or job losses that its proposal would cause. It added: “Tax policy should be evidence-led, proportionate and based on a full assessment of its impact on jobs, investment, consumers and communities.”
After Santander Bank, European Climate Foundation and Visa, anti-gambling campaigner Derek Webb was one the largest financial backers of SMF in 2024. The transparency information for 2025 is yet to be released.