Tax Row in the UK: Leak Reveals Doubts Over Gambling Think Tank Report

The Social Market Foundation (SMF) is facing awkward questions after a draft of its flagship report, including internal comments from senior staff, surfaced online. The timing is particularly poor for the think tank, as Chancellor John Healey is set to deliver his Budget on Wednesday 28 October. A significant increase in Machine Games Duty (MGD) is widely expected in this announcement, a move the SMF has vocally championed. The document was published on Tuesday by Guido Fawkes, a political news website known for its leaks. It appears the draft was accidentally uploaded with staff comments intact, providing deep insight into the internal doubts of the organization.

Most explosive are the remarks from SMF Director Theo Bertram. In a margin note, he asked authors what grounds they had for confidence that workers losing their jobs due to the tax would find employment elsewhere. Chief economist Gideon Salutin replied in the draft that there was no guarantee for individual workers, although he believed national employment would grow. Regarding crime, Bertram warned colleagues against overstating causality. Salutin responded that a causal link was unclear and changed the wording to correlation. Despite these internal concerns, the radical core demand for a tax doubling remained in the final report.

Numbers and facts

The report, titled Addressing the harm, was originally launched in June and calls for MGD on Category B machines to double from 20 percent to 40 percent. According to estimates, this would raise between 275 million and 458 million pounds per year. The industry has reacted with horror to the revelation that the scientific basis for these demands was internally questioned. Greg Knight, CEO of retail bookmaker Jenningsbet, stated on LinkedIn that the Social Market Foundation has been totally discredited. He accused the think tank of using tax as a smokescreen to see gambling abolished.

The impact of such a tax hike would be massive. The British Gambling Commission (BGC) has already warned that a 40 percent MGD rate could put up to 3,800 casino jobs at risk. Modelling by Regulus Partners suggests that approximately 1,500 betting shops could close immediately. Even the British Horseracing Authority fears a cost to racing of 92 million pounds per year. These figures illustrate that this is not just a theoretical debate but a threat to the livelihoods of thousands of employees.

Background

The political dimension of the leak is significant, as Alex Ballinger MP wrote the report's foreword. He also led a letter from 90 Labour MPs demanding the exact 40 percent tax increase. Critics like Carl Templeton-Smith now argue that it is a damning indictment of policymaking if MPs rely on research without fully scrutinising the evidence. Helen Walton, founder of G.Games, went further, suggesting that some of those producing the data know it is made up but choose to present it anyway. While the leak does not show figures being invented, it proves a deliberate softening of critical passages to avoid jeopardizing a political agenda.

„The Social Market Foundation has been totally discredited. It is using tax as a smokescreen to see gambling abolished.“ - Greg Knight, CEO of Jenningsbet

The British Gambling Commission also reacted to the revelations. A spokesperson told City AM that the reported internal comments raise serious questions about the evidence being used to justify further tax increases. It remains to be seen whether Chancellor Healey will distance himself from the 40 percent target and perhaps settle on 25 percent, as some early reports suggest.

Why it matters for German players

For German players, this incident in the UK highlights that gambling regulation and taxation are often highly political fields where evidence can be secondary to agendas. In Germany, the Interstate Treaty on Gambling 2021 (GlüStV 2021) is the governing framework. While the UK debates 40 percent machine taxes, German providers grapple with strict rules from the Joint Gambling Authority of the States (GGL). Here, the 1,000 euro monthly deposit limit and the 1 euro per spin limit for online slots are already reality.

Discussions about tax increases abroad are often observed as blueprints for domestic regulations. If think tanks work with questionable data, it endangers the acceptance of the legal market. For players in Germany, an over-regulated or excessively taxed legal market often leads to a shift toward illegal providers without a GGL license. This must be prevented through fact-based policy that takes player protection seriously without suffocating the industry.

What it means for GGL-licensed casinos

German casinos with a GGL license must be able to rely on the integrity of the LUGAS system and the OASIS exclusion database. The credibility of underlying data for new legislative proposals is essential for business planning. If international examples like the SMF case set a precedent, demands based on shaky evidence could also arise in Germany. Serious providers in Germany rely on transparency and adhere strictly to the Whitelist to distinguish themselves from black market operators in Curacao or Malta. Only a stable regulatory environment ensures long-term fair conditions for both operators and customers.