The Social Market Foundation (SMF) is proposing a doubling of machine games duty (MGD) from 20% to 40%, just seven months after the UK Treasury hiked online taxes in the Autumn Budget.
The think tank suggests implementing the 40% rate on Category B slot machines while keeping Category C machines at 20% would raise between £275m and £458m annually for government coffers.
“This structure, SMF argues, would insulate the hospitality industry entirely, since pubs are not licensed to host Category B machines,” a statement from the think tank read.
Category C machines have a maximum stake of £1 and a maximum prize of £100. Pubs can have up to two Category C machines, though more can be installed based on Local Authority approval.
Category B machines, which include fixed-odds betting terminals (FOBTs), have £2 maximum stake and a top payout of £500.
FOBTs were limited to £2 per round in 2018, with players previously able to spend £100 per spin on the machines.
These types of machines can be found in betting shops, arcades, Adult Gaming Centres (AGCs), casinos, bingo premises, racing tracks and members’ clubs.
The SMF continued: “Category B machines are associated with higher rates of gambling harms than most other forms of gambling, and are designed to encourage fast, risky and repeat gameplay.”
The think tank has said MGB “only” raises £600m for the Treasury each year and that its modelling indicates problem gambling associated with all types of slot machine use has a total economic cost of £2.3bn per annum.
The SMF was an influential voice when Chancellor Rachel Reeves formulated her Autum Budget last November, with remote gaming duty jumping from 21% to 40%, effective from 1 April 2026.
Remote general betting duty is set to climb from 15% to 25% next April. The 10% duty on land-based bingo was abolished by Reeves in her Budget.
Horseracing, retail sports betting and MGD were also left untouched by the Labour government.
In July 2025, the SMF released a report proposing remote gaming duty be raised to 50%, general betting duty harmonised at 25%, and a reduction to betting duty on horseracing from 15% to 5%.
Another powerful think tank, the Institute for Public Policy Research (IPPR), received backing for its proposals from former Prime Minister Gordon Brown.
The think tank likewise suggested hiking remote gaming duty to 50% and non-horseracing general betting duty going from 15% to 25%.
However, the IPPR also called for MGD to be increased 50% in policy proposals published in August.
The SMF added: “When Chancellor Rachel Reeves doubled remote gaming duty in the 2025 Budget, she explicitly cited the link between online gaming and harm.
“The same logic, the SMF argues, applies even more forcefully to electronic gaming machines (EGMs), which rank second only to online casino games in rates of problem gambling. Since the introduction of MGD in 2013, the tax rate has been based on stake limits, rather than on the basis of associated harm.”
The SMF is due to publish a report, titled ‘Addressing the Harm’, at 5am on Tuesday 30 June, detailing additional policy proposals around the suggested tax hike.
Gideon Salutin, chief economist at the SMF, said: “Our modelling shows that raising MGD 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 way we’ve set it out ensures tax is raised only on the most harmful type of slot machines, while insulating the hospitality industry entirely.
“The public clearly understands this. When a plurality of supporters of every national political party back a tax rise on these machines, it’s a mandate for reform that shouldn’t be ignored by the Chancellor.
“Especially given the Chancellor has already established that taxes should be raised in line with associated harms in the previous Budget.”
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Think tank suggests doubling of the levy for Category B machines to generate up to £458m in tax revenue a year
The post Social Market Foundation proposes upping machine games duty to 40% first appeared on EGR Intel.