Revenue vs responsibility – The Government’s gambling dilemma
The global gambling market was valued at $540 billion in 2023, with the UK contributing $18.6 billion, second only to the United States. By 2029, the total value of the market is predicted to reach $754.8 billion. There’s enormous revenue coming from the gambling industry and with it, plenty of tax.
The online sector is growing the fastest, with almost all major markets predicting quarterly growth – every single quarter. Its compound annual growth rate is estimated at over 10%, taking it from $85.62 billion in revenue in 2023 to somewhere around $370 billion by 2032. A really good hedge fund manager would be more than happy with 10% annual growth. What does this mean for the UK government?
In this article Claudia Hartley looks at the revenue vs responsibility dilemma that faces the government in light of this growth:
Does more gambling tax revenue mean more problem gamblers?
A huge increase in revenue is great news for financially-stretched governments. After all, more revenue equals more tax. The only fly in the ointment is that more gambling almost certainly means more problem gamblers. It’s a tricky balancing act to promote revenue generation and also reduce gambling related harm, two goals that the UK government is keen to achieve.
UK vs Australia; comparing problem gambling rates
At present, the UK problem gambling rate (that is the percentage of the UK population who are at some risk of problem gambling) sits at 2.5%. This has increased pretty sharply from the 0.5% cited in the previous survey. For context, in Australia 46% of those who gamble are regarded as at some risk of gambling related harm – which equates to around 33% of the population. While any rate of problem gambling should be addressed, it’s important to not be too disheartened by the UK figures.
Is it possible to equate the human cost of problem gambling to the financial gain from the gambling industry? Is there a level of problem gambling that we are prepared to accept in order to maintain revenue from taxes? There’ll be people firmly on opposing sides of the fence, but personally, I’m still sitting on it.
The cost of social responsibility
As a result of increasing problem gambling risk rates, the UKGC made big steps to change how the gambling industry, particularly the online sector, functions. In 2024, light touch financial vulnerability checks were rolled out. These checks began at a total spend threshold of £500 in August, but at the end of February 2025, this will be reduced to just £150. Alongside this, perhaps the most controversial part of the checks were the parameters used to decide whether someone was at risk of problem gambling. One of these parameters? Your postcode.
Understandably, many in the industry believed that this was tantamount to wealth discrimination and as such, these checks are still an area of huge contention. Speaking to the Racing Post, former MP Laurence Robertson explained the impact he felt the checks had made:
“I’d lost about 30 quid in 3 months and I was being asked things like how had this loss impacted my life, was I lying awake worrying about it, or drinking more – these sorts of crazy questions… it went way beyond what I would have expected to be asked as a PEP.”
It’s important to remember that Robertson was a politically exposed person, so he had been subject to checks as part of his career. However, the point he makes here is that the ‘light touch’ checks went beyond what he had experienced as a PEP. Perhaps, not terribly ‘light touch’ after all. A crucial detail is that he had to complete these checks before he could bet again.
Other (unlicensed) options for players
Put yourself in the shoes of somebody with a gambling problem. Your options are to complete the checks, get flagged as a risk, and potentially have your gambling account suspended. Or to ignore the checks, withdraw your funds and sign up at a site that doesn’t implement checks. Which are you choosing?
Some of the changes that the UKGC have implemented make total sense, but these checks aren’t one of them. They will work in some cases, but those with serious gambling problems have so many options available to them on the black market. Not only does that mean their problem gambling isn’t being addressed, but it also means any tax revenue that they would’ve been generating for the government is now gone too.
The UKGC gets it right
While affordability checks remain a difficult issue, there are some brilliant initiatives that the UKGC has introduced in recent years. Most recently, the voluntary levies (which many operators avoided) have now been made mandatory. The levy will apply at rates of between 0.1% and 1.1% of gross gambling yield to all companies with a UKGC licence.
While there’s been rightful concern that at present the National Lottery doesn’t have to pay this levy, the rest of the implementation here has been an excellent thing. It is expected to generate around £100 million annually which will directly fund organisations that support problem gamblers and help to prevent problem gambling from developing.
Tax revenue more than covers cost of care
Asking gambling companies to contribute directly to the problems caused as a result of using their services can only be a sensible solution. Each year, it’s estimated that the direct cost to the UK government of gambling related harm is around £412.9 million. It’s impossible to remove all emotion from problems like this, but based on figures alone, tax from gambling companies (£3.4 billion) covers this cost about 8.23 times. Adding into this the help that the levy is providing, and it seems as though our problem gambling problem is not rooted in lack of funds.
Allowing gamblers the right to decide
It isn’t just the UKGC that’s making strides towards a better regulated industry, the UK has many organisations and charities making a huge impact. One such initiative is the recently launched GAMProtect, a voluntary scheme that allows online operators to share information on the most vulnerable customers on their sites. At present, six of the largest operators (Flutter, Entain, Bet365, William Hill, Broadway Gaming, and Betway) have all opted in.
As part of the program, gamblers who self-identify as being at risk can flag that with operators who will then close the customer’s account and share this flag amongst the other operators that have opted in, enabling any matching accounts to be closed as well. It makes the process of self-excluding more streamlined and importantly, puts the ball in the gambler’s court. Giving gamblers the autonomy to decide for themselves when their gambling has become a problem feels like the kind of responsibility that all adults should be afforded.
Vocal critics and their impact
We’ve looked at what problem gambling costs in terms of pounds and pence, but what are the other costs? The gambling industry has many vocal critics. Gambling With Lives is a particularly vocal group, founded by bereaved families who have lost loved ones to gambling-related suicides. When listening to groups such as this, it’s impossible to downplay the devastating effects that problem gambling can have. Gambling With Lives have been pivotal in shaping not just public perception, but also policy discussions. However, their argument is that the industry is fundamentally exploitative and their push for a total ban on gambling advertising and sponsorships, are perhaps too extreme a measure.
Discourse needs to be framed appropriately
When faced with a topic like gambling, it can also be perilously easy to fall into the trap of appearing to preach, rather than help. Strong anti-gambling rhetoric can cause those who enjoy gambling safely to feel less confident about sharing their views. Holier-than-thou groups can push those safe gamblers into feeling as though their pastime is something to be ashamed of, not something to share. The most extreme consequences of problem gambling often arise from not feeling able to speak about your problem.
Industry response
On the other side of the argument are some industry representatives. The Racing Post had a very public spat with the UKGC on what they believed to be heavy-handed regulation regarding affordability checks. Much of the industry agreed. Their point being that intrusive checks would lead gamblers to explore unregulated markets. We mentioned before that these sites drive away tax revenue from the government (around £4.3 billion per year at present), but arguably the bigger problem is that these sites do not need to adhere to safeguarding rules.
The UKGC rightfully ensures that all sites it licences offer an arsenal of responsible gambling tools and can direct gamblers in need to organisations that can help them to play responsibly. Sites without a licence don’t need to do this, so generally speaking, they don’t. While banning gambling advertising and sponsorships will stop certain people from using gambling sites, it might just cause those who really need help to look to meet their gambling needs in exactly the wrong places.
Balancing act
For the government and UKGC this is an extremely delicate balancing act. The effects that problem gambling has on those within the gambler’s personal network are immense. However, ham-fisted overregulation can make things much worse. We need to regulate without driving the industry underground – and that’s a challenge. The only way to reduce problem gambling is to make the gambling industry safer, not to seek to remove it entirely.
Is there a way forward?
Governments face an unenviable task in managing the dual pressures of economic benefit and social responsibility. Gambling generates enormous tax revenues. This helps to fund vital public services, and generates more than enough to address any monetary losses from gambling related harm. However, there’s a human cost that, although comparatively very small, cannot be ignored. Some may also point out that there’s a human cost to having cars on the road; this kind of argument could be extended to many areas of our daily lives.
From mandating levies to introducing affordability checks, the UKGC has made notable strides in addressing problem gambling. But, there’s still room for improvement. Understanding unregulated markets more clearly could be a deciding factor in being able to redirect gamblers away from them. Making better informed regulations that balance individual freedoms with reasonable protection isn’t going to be easy – but we shouldn’t write it off as impossible. Certainly, the government has a responsibility to safeguard us, though we don’t need to be nannied, alienated, or driven to unregulated markets in the process.
Collaboration key
The UKGC has to maintain public trust by being transparent and taking on board the concerns of critics. The right balance should allow responsible growth of the industry, while minimising the negative effects on society’s most vulnerable. As always, collaboration between regulators, the industry, and advocacy groups is the only way forward.
