Gambling Will Reeves take a punt on tax rises despite industry's lobbying blitz?

Gambling companies don't lose very often - but they are not usually playing a game of poker against the chancellor of the exchequer.

- Rob Davies

At next week's budget, Rachel Reeves is widely expected to announce an increase in the duties that bookies and casinos pay to the Treasury, ending months of speculation and frenzied lobbying designed to sway the government.

The tax hike could cost the industry anything between about £1bn and £3bn, depending on how far Reeves turns the screw. The devil is in the detail.

How is gambling taxed?

It's complicated but, in essence, it works like this. When customers win, they aren't taxed at all. For companies, there are three main rates of duty:

• Remote gaming duty (RGD), applied to online games of chance, is levied at 21% of profits applied to what they win from punters.

• Machine games duty (MGD) applies to physical slot machines, mostly at 20%.

• General betting duty (GBD) is taxed on bookmakers' winnings from sports such as football and horse racing, mostly at 15%, both in betting shops and online.

Together, these duties raised about £2.5bn last year, paid out of industry revenues of about £11.5bn.

What is being proposed?

The Treasury has consulted on harmonising the varying tax rates but almost nobody wants this to happen or thinks it will.

Two influential thinktanks, the Institute for Public Policy Research and the Social Market Foundation, recommend increasing all of the rates significantly, to raise £3.2bn and £2bn respectively. Both say that RGD, the largest of the duties because it is charged on the fast-growing online sector, should be more than doubled to 50%.

The former prime minister Gordon Brown has backed the higher figure, which he and the IPPR say could pay for an end to the two-child cap on state benefits.

What do gambling firms say?