New gambling tax is moving up the agenda – here’s how it needs to work

Gambling has become a talking point in the UK Conservative Party leadership election after the health secretary Matt Hancock called for a £100m-plus annual levy on betting companies. If chosen as the next prime minister, Hancock said he intends to impose a 1% tax on these companies’ profits to pay for treatment and research into this area.

Labour have also called for this policy and a radical overhaul of the UK Gambling Act. The party has described gambling as a “hidden epidemic”, and deputy leader Tom Watson has promised that it would introduce a mandatory levy on the industry if elected to government.

It is certainly good to see this issue being addressed by frontline politicians. But imposing a levy is one thing, spending it wisely another – for the swathes of people affected by gambling harms, it is vital that we get this right.

The ripple effect

There are around 340,000 problem gamblers in the UK, and over half a million more people at moderate risk of harm from an expanding commercial landscape of products, particularly electronic gaming machines and games on online platforms.

The impacts from problem gambling spread out to families, communities and society as a whole. As well as financial problems, they include relationships breaking down, the abuse or neglect of partners and children and, in extreme cases, suicide – with all the corresponding burdens on social and health services that this involves.

Eyes down. Jordan BauerCC BY

For every one person with problems, it is estimated that five to ten other people end up being affected. Cost estimates to the UK alone range from £200m to £1.2 billion per year. The Faculty of Public Health has called this a “serious and worsening public health issue”.

In Australia, where the evidence base is more fully developed, the burden of harms on health and well-being is estimated to be comparable to alcohol misuse. From an economic perspective, it actually costs societies more if they ignore these harms than if they address them.

Several years ago in Australia’s state of Victoria, for example, total tax revenue from gambling was AU$1.6 billion (£874m) while estimated social costs were AU$7 billion, a net deficit of AU$5.4 billion.

The funding gap

In the UK, the current system of funding for research, education and treatment of gambling harms relies on voluntary industry donations to a charitable organisation, GambleAware. Too often, GambleAware struggles to meet its target contributions of just 0.1% of the money that industry retains once bets have been paid out – known as the gross gambling yield. That’s about £10m in donations for an industry whose gross gambling yield exceeds £14 billion. In this context, a £100m annual levy could clearly make an enormous difference.

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Yet while Hancock’s promises to fund treatment and research are welcome, he makes no mention of prevention. This is disappointing, since any attempt to reduce gambling harms must address causes and not simply consequences. That prevention is better than cure is well recognised across other areas of public health. It is also a matter of social justice, since those who suffer from gambling are disproportionately likely to be poorer people from the poorest areas.

In the UK in 2017-18, the total spending via GambleAware on prevention was less than £1.5m, which amounts to approximately 2p per capita. Compare this to a jurisdiction that treats gambling as a public health issue – in New Zealand, for instance, where harm reduction is a legislative requirement, the annual budget for prevention is more than NZ$18m (£9.3m) for a population of 4.7 million. That’s 99 times more per capita than the UK.

Prevention would involve using legislation to curtail advertising, particularly the personalised marketing that we see all over social media. We should be stricter about promotions and inducements, such as special offers and “free” bets, and stop the use of online credit.

We need tougher regulations on the design and placement of gambling products: this was done recently with high-stakes machines, but betting companies are already finding ways around these rules with different machines.

Prevention also means targeting people who are at risk. This sort of approach is under developed in gambling, so we need to invest in research to understand what works, for whom and under what circumstances. This also needs to be supported by public health campaigns to increase awareness.

Optimising the system

There are several other critical considerations. The first is that funds from a levy need to be ringfenced. Experience from other jurisdictions such as Ontario, Canada shows that if funding is not ringfenced, monies can become swallowed by national healthcare budgets. There are precedents for doing this in the UK: all monies from the sugar tax go to school sports, for instance, while from next year the majority of the Highways England budget will be ringfenced funds from vehicle road duty.

Machine learning. Igor_Koptilin

Prevention, education and treatment all need to be grounded in robust and trusted evidence. One option involves channelling funding through the infrastructure and expertise of independent academic research councils such as the Economic and Social Research Council and the Medical Research Council.

Another would be to adopt the Department of Health and Social Care’s highly successful model of policy research units. This could help to produce timely evidence that keeps up with the speed at which gambling technologies are changing.

Finally, we need to overhaul the system in which commercial gambling is regulated. This would involve a new gambling act that is focused on protecting public health rather than promoting gambling as a leisure activity. This new approach is long overdue.

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