UK residents with online gambling accounts will be hit by increased “sin” tax as part of Philip Hammond’s budget.

The new increases, which also impact cigarettes and wine sales, are set to generate £1 billion in taxes over five years from online wagering alone.

The government’s decision earlier this year to cut the maximum stake on fixed-odds betting terminals (FOBTs) from £100 to £2 triggered an overhaul of gambling tax, due to take effect in October.

Lost revenue from the machine gaming duty levied on FOBTs is expected to cost the exchequer £1.15bn over five years, according to Treasury projections.

It will make up for the shortfall by increasing the tax on online casino games from 15% to 21%, raising an estimated £1.25bn over the same period.

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While the tweaks to gambling tax will cancel each other out fiscally, both FOBT campaigners and online gambling companies are likely to be unhappy.

Campaigners against FOBTs criticised the decision to postpone FOBT curbs until October last year.

Labour’s deputy leader, Tom Watson told UK publication The Guardian: “By rolling back on their promises the government are allowing greed to triumph over good as the bookies trouser an additional £900m in revenue.

“The new secretary of state has let down not only his predecessors who campaigned for urgent change, but all the gambling charities, reformers and addicts who were relying on him not to bow to the will of the Treasury.”