The BGC cited new data from YouGov, which found that 69% of bettors surveyed said that free bets should be allowed.
Meanwhile, 28% said that they would consider black market betting if a free bets ban was enforced.
A total of 63% said that they viewed free bets as an important part of their gambling experience.
The BGC also pointed to its own analysis, which revealed that a free bets ban would result in a loss of £5m for the horse racing industry.
“Promotions and offers are part of the customer experience for any vibrant industry, including our intensely competitive sector, which supports 119,000 jobs and brings in £4.4bn in taxes to the treasury,” said Michael Dugher, chief executive of the BGC.
“A draconian ban would damage a sector which tens of thousands rely on for their livelihoods, by turning punters away from the regulated industry into the arms of unsafe, unregulated black market gambling, where the numbers using such sites has doubled in recent years and the amount bet is in the billions. These sites have none of the safer gambling tools the regulated industry employ.”
Dugher added that the BGC supports how the government is approaching gambling reform, but disagrees with the focus on how customers choose to bet.
“We support the government’s ‘evidence-led’ approach to gambling reform, which is why any changes should be carefully targeted to protect vulnerable players and those at risk, not the vast majority who bet safely,” continued Dugher. “Ministers shouldn’t be sticking their nose into how people choose to spend their own money, and the last thing they should be doing at this time is damaging business and sport.”