Mr Osborne said: "Fixed odds betting terminals have proliferated since gambling laws were liberalised almost a decade ago.
"These machines are highly lucrative, and therefore it's right we now raise the duty on them to 25%."
Glasgow has more betting shops than any other city in the UK with more than 200.
Councillors have been concerned that bookies are targeting poorer communities.
Paul Rooney, city treasurer, and Labour councillor, said: "Our focus and concern is on the users and players of these machines. This does nothing to address the problem.
"I can understand the Chancellor wanting to increase the tax take but our focus has to be on addressing people getting into financial difficulty. "
Shettleston MSP, John Mason, said: "We already know that, in poorer areas in particular, the operators of FOBTs are quite literally coining it in at the expense of low-income young men who are extremely vulnerable when using these machines, often losing hundreds of pounds within minutes.
"I would support increased tax so the money can go to schools and hospitals rather than as profits to these companies. But longer term I want to see fewer of these machines."
Meanwhile, bingo players are celebrating the Chancellor "exceeding expectations" with his announcement that duty will be halved to 10%.
The Boost Bingo campaign run by the Bingo Association had been calling for the levy to be reduced to 15% to bring it into line with other gambling activities, gathering more than 330,000 petition signatures and the support of more than 50 MPs.
The association said the announcement meant bingo clubs across England, Scotland and Wales could now fulfil their commitment to invest in new premises and jobs.
Bingo Association chief executive Miles Baron said: "This is the most fantastic news.
"Everyone is absolutely delighted. The decision to reduce duty by 10% means bingo clubs will get an even bigger boost than we had hoped for.
"Bingo operators identified a programme of investment that would be freed up by a 5% tax reduction.
"Now that we have secured a 10% reduction, operators will be relooking at their investment and modernisation plans."
The Chancellor said the number of bingo halls had "plummeted by three-quarters over the last 30 years".
The Bingo Association has blamed the higher tax rate for hall closures and the loss of almost 2,000 jobs.