UK bookmakers could soon be confronted with gross profits tax on fixed odds betting terminals (FOBTs) set as high as 22 percent according to new analysis from Morgan Stanley.

A crucial government-ordered report on the future of FOBT machines in British bookmakers’ shops is set to be published later this week.

The Gambling Commission’s long-awaited report into the impact of high-stake, high-prize gaming machines on problem gambling has recommended no immediate action be taken - a conclusion that has satisfied the UK’s bookmakers.

As had been expected, the UK Government yesterday announced measures to put the bingo industry on a better footing via the doubling of allowable £500 jackpot machines per club. But while the opposition has attacked the announcement as being too little too late, one analyst believes the news could open up the way for a bidding battle for operator Rank.

Improved awareness of gambling addiction among health officials, a national helpline, and additional research into fixed odds betting terminals (FOBTs) should be priorities for the Gambling Commission’s problem gambling strategy, according to a governmental advisory board.

Tax and regulatory changes have allowed for the explosive growth in the use of fixed-odds betting terminals (FOBTs) in UK betting shops over the past decade. But as FOBTs continue to cause some degree of concern to both the Gambling Commission and the Department of Culture, Media and Sport - based on a growing body of evidence that the machines may prove particularly attractive to problem gamblers – certain question marks remain over their future.

The UK’s Department for Culture, Media and Sport (DCMS) has confirmed it will aim to have increases in stake and prize limits on Category C and D gaming machines approved by Parliament before Easter in order to help the struggling pub and arcade industries.

The UK government is likely to turn to increased taxation and the introduction of playing limits on fixed odds betting terminals (FOBTs) should evidence emerge of increased problem gambling, according to analysts at JP Morgan. Fearing the consequences for UK bookmakers, the investment bank instead recommends diversified European lottery companies including Lottomatica and Intralot.

A move by the UK’s Department of Culture Media and Sport to consider allowing increased payouts on category C and D machines has been welcomed by seaside arcade operators, but the process has exposed a worrying absence of empirical evidence as to the effects of bigger prizes, leaving operators at the mercy of political prejudice.

The UK is now unique among leading international gambling jurisdictions in permitting low stakes gaming machines to be accessed by minors, a new Gambling Commission study has found, highlighting concerns that youth gambling could be an “emerging public health issue” in Britain.