Levy outlined by UKGC
It’s been in the works for some time, but the mandatory levy on casino operators is now upon us, having officially come into effect on 6 April 2025. The UK Gambling Commission (UKGC) recently published some additional specifics.
The levy is the latest of several measures that have emerged from the 2023 Gambling Act White Paper Review, the first big revamp of British gambling law since the Gambling Act 2005.
This move is designed to raise around £100 million each year. Beneficiaries include gambling support and healthcare organisations along with research, prevention, and treatment initiatives.
The levy is welcomed by many. Despite taking a bite out of casinos’ profits, it replaces a flimsy voluntary system which saw some operators making cynical token donations of as little as £1.
Who will be paying what?
The idea of the levy was floated in 2023, when the first round of White Paper discussions began. Since then, the UKGC has been working to iron out the specifics, and to determine who will be paying what.
All UKGC licence holders will pay a set rate of between 0.1% and 1.1% of their Gross Gambling Yield (GGY). The objective is to raise £100 million per year.
The highest rates will be paid by online gambling operators. This includes online casinos, betting, and bingo providers. These companies will pay 1.1% of their annual net income. This higher rate is intended to reflect the higher-risk nature of the services these companies offer.
Lower rate for brick and mortar casinos
Most brick and mortar casinos face lower rates, ranging from 0.2% to 0.5%. This includes all physical, land-based casinos, betting shops and bingo halls.
Only 0.1% of revenue will be taken from operators of family entertainment centres and gaming machine suppliers. This same rate also applies to a couple of specialist niche service providers.
No levy for the Lottery
The National Lottery is not required to pay the levy. It’s true that the Lottery has its own charitable causes, but this exemption reaffirms the idea that it sometimes gets preferential treatment, and that it’s not considered ‘real gambling’. The Commission has received some flack for this in the past.
Who, and what is the levy for?
Essentially, proceeds from the statutory levy are intended to fund research, prevention and healthcare associated with problem gambling in England. Wales and Scotland will operate similar schemes. According to the UKGC: “Full details of how the levy will be calculated and how to make payments will be provided before September 2025.” However, the Office for Health Improvement and Disparities (OHID), which has been assigned the responsibility of allocating and distributing the funds, has given some indication.
Allocation
According to an OHID statement published on 12 February, the funds would likely be allocated as follows:
- 50% for treatment services (directly to the NHS)
- 30% for prevention initiatives
- 20% for research
The OHID mentioned other areas that might receive funding in the future. These include support for awareness-raising schemes, local and regional initiatives, and building support for front-line organisations.
An annual commissioning report is to be published on the government website.
The challenges of dishing out £100 million
The UK is home to an impressive network of support organisations, but this means many vying for a share of the funds.
£100 million could go a long way and do a lot of good, but there are questions to be considered regarding who actually gets the money and what they do with it.
More information needed
The OHID has not provided any further details or updates since its initial statement in February, but there are some critical ambiguities to clear up.
With the official title of ‘Prevention Commissioner’, OHID’s own funding comes from the 30% of the levy intended for preventative measures. It’s not yet clear how much this will amount to, or whether OHID spending will be monitored for bias.
The OHID reports to the Department for Culture, Media and Sport, but the specific channels of accountability have not been clarified. Although answerable to the National Audit Offices, as the OHID handles this large sum, we need to know exactly who it will report to.
Communication concerns
We also need to know how the DCMS and Department of Health and Social Care will be communicating, and how the latter intends to spend its £50 million per year.
It seems that certain preventative measures, such as shutting down illegal sites, will remain the responsibility of the UKGC, and that levy funds will not be used for these purposes.
What are the implications?
Generally speaking, the introduction of a mandatory levy is great news for everyone except operators and their representatives. Despite the levy eating into casino profit margins, there’s likely to be very little resistance.
For the industry in the broadest sense, the levy should reinforce the market, helping to keep it viable and reliable. It may even allow brick and mortar casinos to operate more competitively, potentially winning back some customers.
National lottery
It’s likely that the introduction of the levy will reignite conversations around the National Lottery, which is exempt from contributing. The Lottery is governed by different rules, and is already obliged to put 28% of ticket sales towards ‘good causes’. This difference in the way the Lottery is treated is still considered unfair by many. It seems doubtful that little or any of the 28% of ‘good causes’ lottery revenue ends up addressing problem gambling.
Levy welcomed
The levy has been welcomed by most charities and support organisations. For many, the shift from voluntary to mandatory model is overdue. Some of the more critical voices will be satisfied by this move for a time. More staunch anti-gambling lobbyists may well argue that it’s too little too late.
But one of the most significant impacts of the levy will be on players themselves. Those who are at risk or who require support services will have access to the same network of organisations, only these organisations will now be better funded. Even for those who don’t currently make use of these services, a more well-equipped safety net is a good thing.
Costs absorbed
In most cases, operators will absorb the costs and not pass them on or offset them by reducing the value of bonuses and promotions. This will be easier for some than others, and smaller casinos will feel the impact of the 1.1% charge.
The levy will bring better research, more resources, and wider support outreach. Ultimately, if sensibly allocated, the funds will trickle down to where they can help those who need it most.
Pros and cons of the levy
There are two sides to every coin – at least two sides. As mentioned, most will welcome the statutory levy, but it will certainly cause friction too.
Pros:
- More funds to go towards helping struggling players
- Better preventative measures to curb problem gambling in the long haul
- Additional research to inform data-based regulatory decisions
- Large allocation of funds for healthcare should lighten the NHS’s load
- End of insultingly low token contributions
Cons:
- Smaller casinos may suffer
- Some sites may pass on costs to customers
- Various OHID-related ambiguities need to be resolved
- Likely to spark debates regarding fairness of rates
- Competition regarding fund allocation to be expected
And like anything where the Government or one of its agencies collects money, it remains to be seen what proportion will be swallowed up in bureaucracy and administration.
Summary
The mandatory levy is an intelligent initiative, and a good move on the part of the UKGC. Still, only time will tell exactly how successful it will be. It remains to be seen exactly how funds will be distributed. As with all new initiatives, a few teething problems can be expected.
Not smooth sailing just yet
Speculatively, as discussions take place, we might expect to see some big developments. These could include changes in the treatment and status of the National Lottery, or changes to the levy rates for different business types. We might even see a closing of the gap between online and physical casinos.
Unfortunately, in the more immediate future, we’re likely to see an increase in problem gambling rates because of the ongoing exodus to the black market. As more players use illegal sites, largely because they feel that the UKGC’s recent regulations are oppressive, support services will be strained. Hopefully the Commission will address this separately, and not simply use the levy to offset the damage done by its overregulation.
