High-street slot machines and casinos could face £460m tax rise under Burnham

All-night slot machine shops and casinos could face a £460m tax rise if Andy Burnham acts on his concerns about the gambling industry as prime minister, after an influential thinktank found the policy would have public support.

Known by some in the gambling sector as “slot sheds”, adult gaming centres (AGCs) have flooded UK high streets in recent years, disproportionately targeting economically deprived areas.

But while online casinos were hit with a tax increase in Rachel Reeves’s November budget, duty on the physical slot machines available in AGCs was left untouched.

Burnham is widely tipped to oust Reeves as chancellor if he becomes prime minister. He has previously condemned reports of AGCs exploiting vulnerable people and called for tougher regulation to prevent their spread.

He also backed a proposal by Gordon Brown last year to pay for an end to the two-child benefit cap by tapping the gambling industry for more tax.

The Social Market Foundation (SMF) thinktank released polling on Monday showing that 43% of the public would support any move by a future Labour administration to raise taxes affecting AGCs, which offer a £2 slot machine spin every 2.5 seconds.

The sector’s rapid growth has brought record takings for operators, according to official figures released last year by the Gambling Commission.

Doubling machine games duty (MGD) from 20% to 40% could increase the tax take from “Category B” £2-a-spin slot machines by between £275m and £458m, on top of the £600m they currently pay, according to the SMF.

The plan would hit casinos as well as the AGC sector’s largest companies, such as Austrian-owned Admiral and German-owned Merkur, which was fined last year after exploiting a gambling addict who was suffering from terminal cancer.

Bookmakers would also be affected, a side-effect that is thought to have deterred Reeves from the move after concerns were raised by the horse racing industry, which derives hundreds of millions of pounds a year from a levy on betting shops’ profits.

The SMF proposal would leave lower-stakes category C and D fruit machines in pubs untouched, in order to avoid cutting off a source of revenue for the beleaguered hospitality sector.

Bacta, the trade body for AGCs and amusement arcades, said the SMF report was “fantasy economics and grossly irresponsible”. It predicted that the proposed increase would reduce the tax take and cost jobs.

“A 40% rate would devastate high streets and seaside towns, close responsible family-run businesses and risk pushing customers away from safe, regulated environments towards the illegal market,” it said.

The Betting and Gaming Council (BGC) said it had not seen the report but that any increase in MGD would cost jobs, adding that betting shops “keep high streets alive and provide valued community spaces”.

Burnham has previously accused AGCs of “targeting some of the most vulnerable in our communities” and has twice lent his name to calls to give local authorities greater powers to stop new slot sheds opening up.

Earlier this year, he was among 300 signatories of a letter to Keir Starmer calling on him to scrap the controversial “aim to permit” rule that has fuelled the spread of gambling premises.

The rule, introduced by the 2005 Gambling Act when Burnham was a junior minister in Tony Blair’s government, forces licensing authorities to err on the side of allowing new gambling venues to open.

It has effectively tied council licensing committees’ hands even in the face of local opposition to new sites, as well as leading to local authority planning refusals being regularly overturned on appeal to the Planning Inspectorate.

While the government did not get rid of the rule, it did introduce new “gambling impact assessments” through the Devolution Act passed in April.

The more moderate measure, also backed by Burnham, allows councils to factor in the number of premises already in the area when making licensing decisions.

In Bowes Park, Enfield, the legislation appears to have arrived too late for a campaign group opposing a new 24-hour venue, under the Palace Amusements brand, on the corner of a residential street.

“There are already 18 gambling premises within 1.5 miles,” said Rick Harrison, who is involved in the campaign.

“Businesses think it will increase crime and antisocial behaviours, which is already a problem.

“Why do we have to accept that it’s only vape shops and gambling shops that can open? I can’t see that it’s doing anything positive for the community.”

Godden Gaming, the company behind Palace Amusements, said Enfield council “does not identify Palmers Green and Bowes as a gambling vulnerability area.

“As part of our new application, we have undertaken an in-depth local area risk assessment to identify and mitigate against all potential risks associated with upholding the licensing objectives.”