A recent report commissioned by Peers for Gambling Reform has outlined the potential fiscal implications of proposed gambling regulations, estimating costs between £696 million and £974 million annually. This analysis was conducted by Nera Economic Consulting, referencing the reforms suggested in the group's July 2020 report, "Gambling Harm – Time for Action."
The 2020 report emphasized the need for an extensive overhaul of gambling regulations in the UK, focusing on five main objectives. These included imposing stake limits for online gaming products, standardizing play speeds across various platforms, and instituting affordability checks to ensure that players do not bet beyond their financial means.
Additionally, it advocated for a mandatory levy on gambling operators to finance research, education, and treatment for gambling-related issues, with higher rates applied to the most harmful products. The report also recommended prohibiting direct sports sponsorships by gambling companies and categorizing video game loot boxes as a form of gambling.
The follow-up report by Nera seeks to quantify the impact of these proposed reforms. Its initial findings regarding stake limits indicate that imposing a cap between £1 and £5 could significantly reduce gambling amounts. For instance, if a £5 limit were implemented, wagering could drop by 14% to approximately £1.19 billion from £1.38 billion. A £2 limit could lead to a 23% decrease, while a £1 limit might reduce stakes by 36%, resulting in spend dropping below £1 billion to about £891 million.
However, the study does not evaluate potential behavioral changes, such as players extending their gambling duration or raising their bets to match new limits. It also excluded estimates on the effects of spin speed limits; while the Gambling Commission's mandatory 2.5-second spin limit will take effect in October, Peers for Gambling Reform suggested a five-second limit.
For table games like roulette, setting a minimum spin duration of 88.6 seconds could lead players to increase their stake amounts while reducing the number of bets per session. Nera anticipates this could reduce total stakes by about 52% at a 21-second spin speed and up to 76% with a longer spin.
The report further explored affordability checks, suggesting that deposit limits for players could be set at £100 or 10%, 15%, or 20% of their monthly disposable income, based on the UK’s median annual income estimates. Should checks be triggered by spending over 20% of income, online casino revenue could decline by 32%, a loss of £1 billion. Sports betting would see a smaller drop, with revenues falling by 22%, or £505 million. For thresholds of over 15% and 10%, potential losses for online casinos and betting would increase significantly.
Regarding the proposed mandatory levy, it is suggested to be 1% of industry profits, roughly translating to £150 million. The Responsible Gambling Strategy Board underscored that meaningful funding to combat gambling harm would need to exceed the current £19 million allocated for research, education, and treatment, potentially requiring up to £106.5 million overall.
Regulation of loot boxes, which would be a new responsibility for the Gambling Commission, is estimated to cost around £20 million annually for oversight, potentially offset by fees from game companies. Furthermore, banning direct sponsorship deals with gambling businesses could result in sponsorship revenue losses across various sports leagues, particularly impacting the English Football League with an estimated reduction of up to £26 million in total revenue.
The report also anticipates revenue shifts, suggesting that money previously spent on gambling could flow into other sectors, such as retail and entertainment. While this could lead to increased job creation—potentially up to 30,000 new jobs—it also cautions that diversion of funds might not entirely mitigate the loss of gambling tax revenue.
Lord Foster of Bath, chair of Peers for Gambling Reform, remarked on the report’s importance, asserting that it outlines both economic benefits and the necessity for immediate action to address gambling harm. The Bishop of St Albans reinforced the call for swift legislative reform to protect lives affected by gambling addiction.
