Rachel Reeves has been warned that any betting tax rises will cripple traditional British sports.
The Tories have warned that the Chancellor's reported £1billion gambling tax grab will cost jobs, shut betting shops and rip cash out of racing, football, darts and rugby league.
Bookies help boost sponsorship and media deals, with the Conservatives highlighting that Horse Racing will lose funding.
Although Ms Reeves is understood to be considering an exemption for racing, MPs warn that higher taxes on profits from online will still damage the industry.
Shadow Sport Minister Louie French said: "Labour’s nanny state tax raid on gambling will fuel the black market and damage British sports.
"Hiking betting taxes will put at risk millions of pounds of sponsorship investment into UK sports.
"It’s a foolish plan."
Racing supports 85,000 jobs nationwide, including 20,000 on racecourses, and each meeting "brings life to towns, pubs, hotels and high streets”, Rob Wood, chief financial officer of Ladbrokes and Coral owner Entain, told the Sun.
Rachel Reeves has been warned that any betting tax rises will cripple traditional British sports
|GETTY
He added that three in 10 betting shops had closed in the last six years, with many of the 6,000 left “hanging by a thread”.
Mr Wood added: “And when a shop closes, it is not just the staff who lose.
"The Treasury loses tax. The high street loses footfall.
"Racing loses funding."
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Rachel Reeves is reportedly planning a gambling tax
| REUTERSLast month, racing was voluntarily cancelled in Britain for the first time in history as jockeys and trainers went to Westminster to lobby against any changes.
Horse racing in Britain is the second most popular spectator sport after football, and it has a rich history dating back to Roman times.
It is home to the origin of modern thoroughbred racing and is governed by the British Horseracing Authority.
Horse racing contributes £4.1 billion to the economy and supports more than 85,000 jobs across Britain | GETTYThere are 61 active racecourses across Great Britain, hosting events throughout the year.
Referred to as the "Sport of Kings" due to historical royal patronage, including by Queen Elizabeth II and now King Charles III, the sport generates over £4billion in economic output annually.
Betting is a significant part of the sport's appeal, with millions wagered each year, funding much of the industry through the British Horseracing Authority (BHA) and the Horserace Betting Levy Board.