In a move that will surprise absolutely no one familiar with the phrase 'gaming the system,' the UK government's new budget measure to hike taxes on slot machines may have a loophole big enough to drive a bingo cart through. Chancellor John Healey, in his first budget this week, announced an increase in duty on slot machine takings from 20% to 25%, proudly declaring he was 'raising taxes on gambling to support good growth on every high street.' He also announced that adult gaming centres (AGCs) and vape shops in England would no longer be eligible for a business rates discount aimed at leisure and hospitality businesses.

The prime minister, Andy Burnham, a vocal critic of AGCs, took to Instagram after the budget to back the policy, which is a key plank of his pitch to improve British high streets. But according to Guardian analysis, many shops owned by the UK's two largest slot farm companies, Merkur and Admiral, could escape the tax tweak entirely. Why? Because they've obtained bingo licences for venues that appear to offer slot machines almost exclusively. Gambling Commission records suggest that hundreds of slot machine venues may have exploited this loophole.

When the Guardian visited four Merkur-owned venues and one Admiral-owned venue, all advertised bingo in their shop windows. Inside, however, the shops appeared to offer mainly slot machines. Bingo was available only on tablets stacked in one small corner of the room, allowing the venues to operate under a bingo licence. In at least one case, captured in covert filming, a member of staff said nobody ever used the bingo tablets, and they appeared not to be in working order. The remainder of the venue was dedicated to slot machines offering a £2 spin every 2.5 seconds for a jackpot of £500. These category B3 machines are associated with higher levels of gambling-related harm than most other products, according to several studies.

One so-called bingo venue is the Merkur Slots shop in Stockport, where Wendy Hughes, who had terminal cancer, lost £2,000 over two spells lasting 16 hours. Merkur was fined £100,000 after the Guardian revealed the details of Merkur's exploitation of Hughes, who has since died. The Stockport branch of Merkur is among more than 200 arcades that are licensed as bingo venues, according to Gambling Commission records, despite appearing to be geared towards slot machine play. Some data is duplicated, making it hard to measure exact numbers. Operators could also now convert their remaining AGC licences to bingo.

Labour MP Alex Ballinger, co-chair of the gambling reform all-party parliamentary group, welcomed the tax increase on slot machines but urged the government to be vigilant about the loophole. 'We must ensure these licences cannot be used to sidestep the new business rates rules,' he said. He urged the Department for Culture, Media and Sport to proceed with proposals to tighten the licensing rules, amid a consultation. 'The government has already recognised this problem, and I am confident ministers will work with the regulator to close loopholes and ensure enforcement going forward,' he said.

Business rates expert Paul Turner-Mitchell of the real estate intelligence company Altus Group said the outcome of the tax change could hinge on how the Treasury defined an AGC and how local councils chose to enforce the rules. 'A bingo licence alone does not settle its business rates treatment,' he said. Merkur and Admiral did not respond to a request for comment.

Joseph Cullis, president of the arcade operators' trade body Bacta, said the industry would be hit hard by the tax changes. 'My great-grandfather started our family business back in 1962, and we've spent more than 60 years building it into what it is today,' he said. 'Like many of the family-run businesses I represent across the sector, this decision will force us to reconsider investment and make difficult decisions about our future. Even larger operators will now be forced to scale back their plans.'