It's the newer rare earth magnets (what we see called 'neodymium' in slot cars) that are the problem. They've been causing child fatalities ever since they became commonplace in consumer products around the turn of the century. The CDC in America and the EU started issuing warnings in 2006 about the use of rare earth magnets in toys. You had the bizarre situation of stacks of rare earth magnets being sold as building bricks aimed at young children. And neo magnets sold loose remain the biggest problem today.
Swallowing one magnet has all the dangers of swallowing anything that isn't food - I remember "don't-put-a-coin-up-your-nose" warnings of the 1970s. However, swallowing two or more means the super-strong magnetic attraction between them can pin the bowel walls together and lead to a blockage or tearing of the bowel - both leading to excruciatingly painful and terrifying symptoms. Complications can prove fatal. Treatment often means surgery on the small bowel, which is an operation that can have permanent, life-changing consequences for the child. So it's a big deal when it happens - just use google to find and read the tabloid news stories.
This
article in the Guardian newspaper suggests a recent rise of cases. A total of 52 cases of magnet ingestion requiring hospital treatment were recorded in five years across four children's hospitals in the south east of the UK. However, only 4 cases were recorded in 2016, rising to 25 in 2020. That was compared with a 56% increase in general 'foreign body' ingestion. 22 of the 52 children had surgery to remove the magnets. Thankfully, there was no mention of fatalities. In the US, 1,500 magnet ingestion incidents were reported during the twelve months of 2019 - that was down from 3,600 in 2012.
California - which is always well ahead of the curve in terms of safety laws - introduced legislation in 2008, impacting on the manufacture and selling of toys containing rare earth magnets. Toys had to pass stringent tests to show any magnets were secure when played with normally - including being explored by inquisitive little hands. The AFX Racemasters' new Mega-G chassis failed the tests and AFX made the decision to completely redesign the chassis to comply with the regulations. Not the first or last time AFX have ditched or redesigned products to comply with state safety legislation. They've now moved their HQ from San Diego to Reno.
Interestingly, AutoWorld - AFX's main competitors in the HO 'toy' market - withdrew their products from sale in California. I understand they attempted to label them as 'adult-only' hobby products - but they were obviously toys. Some low-volume 'performance' HO brands do get away with this tactic and are probably too small to even register on the state's radar. Carrera and Scalextric sets and cars have continued to be sold in California, so must have passed the magnet safety tests.
Less stringent regulations exist in other US states, the EU (and inherited, post-Brexit in the UK) and other OECD countries - basic safety tests and a warning on packaging are generally required, but not always enforced. The 'big boys' in the toy industry are going to be right up with the legislation, so I wouldn't worry too much about them. The magnets in Scalextric and Carrera models are secure, whereas Slot.it and NSR magnets can be pushed out quite easily without dismantling the car.
Magnets are a fact of life in the mass-market slot car industry, whether people like it or not. I don't expect any change there. Personally, I've thoroughly enjoyed racing with magnets in HO, 1/43 and 1/32 scale - and without magnets in HO, 1/43, 1/32 and 1/24. And I wonder if using a long-can motor on plastic track counts as magnet or non-magnet racing? In my opinion, there's no right or wrong way to enjoy our hobby - we are all entitled to our preferences... and a bit of open-mindedness never goes amiss.