A week before the Budget, questions have emerged about the evidence behind a proposed £458m gambling tax rise, after internal comments revealed doubts among the campaigners that were pushing for the increase.

The Betting and Gaming Council (BGC) told that the comments, which appeared in a draft report by the Social Market Foundation (SMF), raised concerns about whether the impact on jobs and high streets had been properly assessed.

“The reported internal comments raise serious questions about the evidence being used to justify further tax increases and whether the full consequences for jobs, businesses and high streets have been properly considered”, a BGC spokesperson said.

The row comes as Chancellor John Healey considers raising Machine Games Duty, a tax on gambling machines in betting shops, casinos and other venues, in next Wednesday’s Budget.

The SMF has called for the duty to double from 20 to 40 per cent, arguing that the move could raise up to £458m annually while helping to address gambling-related harm. But a draft of its report, reportedly published with internal comments still attached, raised concerns about the assumptions underpinning some conclusions.

In one exchange, SMF director Theo Bertram questioned a claim that jobs lost through gambling venue closures would be offset by employment elsewhere. “Is this overly optimistic? What’s the basis for the confidence that they will find jobs elsewhere?” he wrote.

Chief economist Gideon Salutin replied that the analysis did not guarantee affected workers would find alternative employment, but maintained that overall employment would grow.

The draft also acknowledged that gambling operators could close venues in response to higher taxes, while Salutin confirmed that bingo halls and seaside arcades would be affected.

The BGC said the comments strengthened its warnings about the potential economic consequences of a further tax increase.

Independent modelling commissioned by the industry body from EY estimates that doubling the duty could put almost 1,500 betting shops and 34 casinos at risk, cost up to 16,000 jobs and leave the Treasury £124m worse off.

The forecasts remain contested, with supporters of higher duties arguing that the tax could raise significant revenue and reduce gambling-related harm.

Gambling firms warn of further cuts

The dispute comes as major gambling operators continue to cut jobs and close betting shops following tax increases introduced in last year’s Budget.

William Hill owner Evoke said on Thursday that it had closed 270 shops over the past year, urging ministers to consider the impact of further rises.

“The closure of 270 shops over the past year shows the real impact on jobs and livelihoods from higher industry taxation, and we urge the UK Government to carefully consider any further increases ahead of its forthcoming autumn Budget”, chief executive Per Widerstrom said.

The warning came with a trading update showing third-quarter revenue fell seven per cent to £406m, although the decline was partly due to favourable results for customers at the start of the football season.

Earlier this week, Paddy Power owner Flutter announced plans to cut around 1,400 jobs across the UK and Ireland to offset higher gambling duties.

Last year’s Budget increased the tax on online casino profits from 21 to 40 per cent, and online sports betting duty will rise to 25 per cent in 2027.

The proposed increase in Machine Games Duty would affect a different part of the industry, including high-street betting shops, bingo halls and casinos.

However, betting shops have been declining in number for years as customers move online, making it difficult to attribute closures directly to taxation. The BGC warned that further tax rises could push customers towards illegal operators, which it estimates already attract £16.6bn in annual stakes.

Reports have suggested the Treasury could opt for a smaller increase to 25 per cent rather than the doubling proposed by the SMF, although no decision has been confirmed.

The Treasury was approached for comment.