Gambling machine tax: the figures behind the proposed duty rise

A £669 million estimate of gambling-related costs to the public purse features in the Social Market Foundation's case for doubling tax on Category B gaming machines. It covers people experiencing problem gambling who reported playing machines, without identifying how much of their harm arose from Category B play. 1

The think tank's June report proposes raising Machine Games Duty (MGD) on Category B machines to 40%. It estimates the change could raise another £275 million to £458 million annually. Its argument also draws on evidence associating machine gambling with elevated levels of harm and the concentration of gaming premises in deprived areas. 1

How the £669m was constructed

SMF starts with Gambling Commission survey figures indicating that 4% of adults played fruit or slot machines in person in the previous four weeks. It applies that participation rate to a population of roughly 55 million adults, then uses a 16.9% rate of Problem Gambling Severity Index (PGSI) scores of eight or above among people who played that activity. 1

Based on those rounded figures, approximately 372,000 people who played fruit or slot machines had a PGSI score of eight or above. SMF reports 371,950, a difference consistent with rounding, although the report does not show the unrounded figures behind its total.

SMF also considers casino games played on machines or terminals. It estimates 291,500 people in that group with PGSI scores of eight or above, but does not add the two groups together. The report assumes complete overlap for its lower-bound estimate because the available data cannot establish how many people used both types of machine. 1

SMF then assigns an estimated annual fiscal cost of £1,798 to each person, using an inflation-adjusted figure derived from government research. For 371,950 people, that amounts to £668.8 million, which SMF rounds to £669 million. Using a broader measure of economic costs, it estimates £2.33 billion. 1 2

A PGSI score measures problems reported by a person across their gambling behaviour. It does not allocate the cause or cost of those problems to individual gambling products. SMF explicitly acknowledges that its survey evidence cannot isolate Category B play. The £669 million is an estimate of costs associated with this group of people. Neither the survey nor the cost calculation identifies how much is attributable to Category B machines. The figure also cannot be used as a forecast of savings from higher duty. 1 2

The £275m–£458m revenue range

SMF's upper revenue estimate uses £2.288 billion of Category B gross gambling yield (GGY) for 2024–25, attributed in its report to Gambling Commission data. Applying a 20% duty rate produces £457.6 million. Applying 40% to the same base produces £915.2 million, an increase of £457.6 million, rounded to £458 million. 1

SMF's £275 million lower estimate implies total annual duty receipts of £732.6 million. At 40%, that corresponds to about £1.83 billion in machine GGY, almost one-fifth below the starting £2.288 billion.

What the forecast cannot establish

SMF's revenue estimates depend partly on how operators and customers respond to higher taxation. Operators could absorb the additional cost, reduce expenditure or change machine returns, while customers might alter their gambling behaviour.

The published figures cannot establish which responses would occur or how they would affect tax receipts. GamRight examines the potential consequences for players in a separate analysis. 1

The Gambling Commission's 2025–26 industry statistics workbook includes revised figures for 2024–25. Its Category B machine GGY total is £2,289.850 million, against the £2,288 million used by SMF. The £1.85 million difference is approximately 0.08%. The figures are closely aligned, although the available evidence does not establish whether the difference reflects revisions to the Commission's data or a separate adjustment by SMF. 4

That comparison supports SMF's revenue base, but it does not independently validate its tax calculation. HMRC currently applies MGD rates of 5%, 20% and 25% according to the characteristics of dutiable games. Category B is a Gambling Commission regulatory classification rather than an HMRC duty band. SMF's comparison assumes a 20% starting rate across the £2.288 billion base. The Commission's GGY tables alone cannot establish that all those receipts were taxed at 20%. 1 3

The Gambling Commission reports approximately £2.7 billion of GGY across all gaming machines in 2025–26. That total covers more machine categories and a later year than SMF's estimate. 4

Employment depends on where spending moves

SMF also cites earlier modelling in which a 10% reduction in gambling spending could support 24,000 additional jobs across the wider economy as consumers spend elsewhere. The 24,000 figure comes from a scenario covering gambling spending generally, not a forecast for the proposed Category B tax increase. 1

Betting shops, adult gaming centres, bingo halls and casinos earn different shares of their revenue from machines. A higher duty bill would therefore hit premises differently. Some operators might absorb it; others could cut spending or close sites. SMF itself discusses closures as a possible response. 1

The employment model does not identify where any additional jobs would be created or when. It also does not show whether workers leaving gambling premises would be able to take them.

The unanswered revenue question

SMF's £458 million upper estimate holds machine GGY constant. Its £275 million lower estimate implies a fall of almost 20%. The Commission's revised data support the starting revenue figure, but the public model leaves an important operational question unresolved: how much would operators change the effective price of play, and how much wagering would customers give up in response? Until those effects are separated, the lower estimate remains a scenario rather than a demonstrated outcome.