Report

Addressing the harm

This report from UK think tank the Social Market Foundation examines the many arguments for raising Machine Games Duty on Category B machines.

In the last budget, the Chancellor almost doubled Remote Gaming Duty (RGD), a tax on online casino gaming because of its particularly harmful impact. In this report, we argue that the same principle should be applied to machine games: a higher tax for the most harmful Category B slot machines.

Six reasons why now is the time to raise Machine Games Duty:

The Government agrees taxes should be set relative to harm – but this logic is not applied to machine gaming: Since Machine Games Duty’s (MGD’s) introduction in 2013, the rate has not been set at a level to account for the higher economic, social, and fiscal harms associated with machine gaming relative to other types of land-based gambling, and tax rates are instead associated with stakes.

Despite the harm of EGMs, they are growing in prevalence in areas of social deprivation: Accounting for population, the average most-deprived local authority sees more than six times as many AGCs as the least-deprived.

MGD does not account for the high costs associated with machine gaming: Our modelling shows that the harms associated with machine gaming led to economic losses worth £2.33 billion, including fiscal costs worth £669 million, through welfare, housing, crime, and health payments. The tax revenue currently raised from MGD stands at only £600 million annually

Government needs new revenue.

Decreasing gambling consumption would be offset by more productive spending elsewhere on the high street: Previous SMF analysis shows that £1 million in consumer spending on retail or food services tends to generate £600,000 in tax, compared to just £500,000 on gambling.

The public continues to support increasing gambling taxes in general, and Machine Games Duty in particular: New polling conducted for this report show a plurality of voters support these measures, with 43% saying Government should increase taxes on slot machines in high street betting shops. The trend holds true across party lines, with over 40% of supporters from every major party supporting the measure.

Recommendations

Raise Machine Games Duty on Category B Machines in the next budget, to account for the harms caused by the sector and to restrain the proliferation of gambling at harmful levels.

By limiting tax increases to Category B machines, government would protect the hospitality sector including pubs.

We estimate that by doubling MGD on Category B machines to 40%, revenue could increase by between £275 and £458 million.