SEASIDE arcades and betting shops warned today that plans for a £5m annual levy to treat gambling addiction were a big blow to family businesses hit by the economic slump.

Trade bodies protested after the Government condemned the industry's very disappointing failure to fund treatment voluntarily - and unveiled proposals for the compulsory levy instead.

Under the plans, an amusement arcade owner with up to five premises will pay £285 next year and £554 in 2010, while a betting shop operator with ten shops will be charged £1,496, then £2,908.

In total, the levy will raise £5.3m including from casinos, bingo halls and pools operators. Owners of a single gaming arcade would not have to contribute.

Gerry Sutcliffe, the sports minister, said the existing voluntary fund was set to fall about £1.2m short of its £4.5m target in this financial year, with some firms not contributing anything.

The levy would come into force in June unless the industry could give satisfactory funding guarantees, to help fund helplines and treatment centres for addicted gamblers.

Mr Sutcliffe said: "Gambling operators have a responsibility to help fund research, education and treatment and it is very disappointing that the industry has so far failed to agree improved voluntary arrangements to do this."

But the British Amusement and Catering Trade Association (BACTA), which represents the pay-to-play sector, described the levy as a further burden at a time when 136 seaside arcades had gone bust in just 18 months.

Nick Harding, BACTAs president, said: "We do not accept there is a need for a statutory levy on the gambling industry in order to fund support charities.

"The treatment of problem gambling is a matter for society as a whole."

And the Association of British Bookmakers went further, warning: "There is a popular misconception that bookmakers live the high life, when the truth is that a lot of small businesses are in difficulties.

"These businesses provide local jobs, often flexible and part-time - jobs that will not be readily replaced."

But the Liberal Democrats said the levy was too late, adding: "Ministers have repeatedly turned a blind eye to the problems their reforms have caused while continuing their hell-bent pursuit of the gambling tax bonanza."