The Social Market Foundation (SMF) is due to release a report on 30 June 2026 calling for Machine Games Duty (MGD) on Category B gaming machines — including Fixed Odds Betting Terminals (FOBTs) — to be doubled from 20% to 40%. The thinktank claims the increase could generate between £275 million and £458 million for the Treasury, though sources note the upper estimate assumes no change in supply or consumer behaviour, a scenario widely regarded as unrealistic.
FOBTs, which carry a maximum stake of £2 every 2.5 seconds and a £500 top prize, would be directly targeted by the proposed changes. Category C machines — commonly found in pubs, with a £1 maximum stake and £100 prize limit — would be exempt from the proposed hike, a decision the SMF appears to have made to avoid conflict with the influential hospitality lobby.
The SMF previously played a role in persuading the UK Government to raise online casino and sports betting taxes in the 2025 Autumn Budget, working alongside the Institute for Public Policy Research. The new report represents the thinktank’s continued focus on the domestic land-based gambling sector.
Dan Waugh, industry expert at Regulus Partners, warned the proposals could cause serious harm to an already pressured sector. “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,” he said. Waugh told Next.io that potential consequences could include closures across betting shops, bingo halls, Adult Gaming Centres, and casinos.
The Betting & Gaming Council (BGC) also rejected the proposals. A spokesperson said: “The BGC has not been provided with a copy of the latest SMF report before publication. However, 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 significant pressures facing businesses across the regulated betting and gaming sector.”
To support its case, the SMF commissioned a Survation poll showing that 43% of UK adults believe the Government should raise taxes on slot machines in betting shops, against just 11% who favoured a reduction. The thinktank also argues that harms linked to machine gaming create economic losses worth £2.33 billion.
Waugh disputed that figure, explaining it is derived by uprating cost estimates from the Office for Health Inequalities and Disparities (OHID) using data from the GB Gambling Survey (GSGB) in place of Health Survey figures on problem gambling prevalence. He noted that the Director-General of OHID has stated those costs cannot be attributed to problem gambling as a cause, and that the Office for Statistics Regulation has cautioned against making that link. He also argued that problem gamblers surveyed typically participate in a wide range of gambling activities, making it misleading to attribute costs to a single product. Waugh further cited evidence from Regulus Partners suggesting the GSGB overstates participation in certain activities by as much as 694%.
Gideon Salutin, chief economist at the SMF, defended the modelling: “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.”
One anonymous industry source told Next.io the SMF’s stance represented a shift from its approach ahead of last year’s report, when it sought to build goodwill with the horse racing sector. “Just last year the SMF was wooing racing — now they’re throwing them under the bus. It’s a huge betrayal. Bookies and bingo halls will close because of this political hit job,” the source said. Racing’s dependence on betting shop levy and media rights payments means large-scale bookmaker closures could carry significant financial consequences for the sport.
The SMF proposals may find political support from Andy Burnham, who is set to become Prime Minister and previously criticised AGCs and Category B machines during his tenure as Mayor of Manchester.
The push to reform FOBT regulation has a precedent. In 2018, the Conservative Government reduced the maximum stake on FOBTs from £100 to £2 following sustained campaigning — a change that came into force in April 2019 and is widely considered one of the most significant regulatory interventions in UK gambling history. The current proposals would represent a further major shift in how machine gaming is taxed rather than regulated.
