Government could continue assault on gambling industry with latest proposed tax rise that would cost racing millions

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British racing has been warned a hike in gambling taxes levied on betting shops would damage the ecosystem supporting the industry following reports that chancellor John Healey is considering targeting the sector in next month's budget, a move industry modelling has previously claimed would cost the sport £70 million.

Treasury officials are understood to be examining how much additional revenue could be raised by increasing machine games duty (MGD), according to a report in The Times, a move which would present a huge threat to British racing's finances.

Healey needs to raise billions of pounds in the budget to pay for already announced increases in defence spending and cost-of-living measures unveiled by prime minister Andy Burnham during his first week in office.

Such a move could have a devastating impact on racing, with industry modelling claiming proposals to double the rate of MGD would lead to 2,912 betting shops closing and reduce the sector’s contribution to racing through levy and media rights by £70m.

Comment:

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"Increases in gambling taxes are definitely on the table again," one government source told The Times.

A spokesperson for the Betting and Gaming Council said the trade body "fundamentally" opposed any increase in MGD.

They added: "It would put further pressure on betting shops, casinos and other venues, cost jobs and investment, weaken high streets and benefit the growing illegal gambling market.

"By the end of 2026, more than 600 betting shops will have closed and 5,000 jobs will have been lost since last year’s budget following increases in remote gaming duty. Doubling tax on a land-based product would lead to more closures, further job losses and damage to the wider ecosystem that supports British racing."

Healey gave his first major speech as chancellor on Monday but would not comment when asked about tax increases more generally.

He said: "If I respond to speculation now that will only fuel more speculation, and it's quite right – and every chancellor would say – that's for the budget and I will set out my plans and the future route for government, for this country, at that budget."

The warning signs for the sport came last month when Burnham lumped licensed betting offices in with "rogue" operators on the high street, while pledging to change the 'aim to permit' rule to make it easier for local councils to block new shops from opening.

Gordon Brown: has called for a major increase in the tax levied on gaming machinesCredit: Dominic Lipinski (Getty Images)

Further pressure came when former prime minister Gordon Brown called for a major increase in the tax levied on gaming machines in betting shops.

This summer, the Social Market Foundation released a report calling on the government to double the MGD rate to 40 per cent for category B gaming machines found in betting shops, arcades and bingo halls. It claimed such a move could raise an additional £275m to £458m in tax revenue.

According to The Times, a Labour source said an increase in machine games duty could help ease the government's fiscal pressures while also supporting the prime minister's pledge to tackle the growth of venues such as adult gaming centres and betting shops.

"Andy hates adult gaming centres," the source said. "But, like all politicians, he loves bingo halls and pubs. They would probably need carve-outs if they do go after machine games duty."

British racing is still reeling from last week’s news that Paddy Power are to shut 100 betting shops before the end of the year, a move that will result in a seven-figure hit to the sport’s income.

Paddy Power were the latest high street operator to announce closures in the face of the higher gambling taxes unveiled in last year’s budget in the UK.

Betfred plan to close 132 of their betting shops, while William Hill owner Evoke chose to close 270 of its betting shops following a strategic review prompted by the budget.

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