Peers for Gambling Reform proposals could cost industry £974m
Economic assessment of selected reform proposals suggests annual revenue damage to UK gambling sector could reach £1bn in worst-case scenario
Wide-ranging reforms to the UK gambling market including affordability checks, a sponsorship ban and a mandatory levy could cost the gambling industry as much as £974m annually if implemented, according to a new study by cross-party group Peers for Gambling Reform (PGR).
The statistic comes as part of an economic assessment of selected House of Lords gambling reforms first proposed by the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry in July 2020.
Researchers examined key changes including affordability checks for online gambling and a direct ban on gambling sponsorships and their resultant effects on UK taxation revenue, the financial health of sports teams and the damage to the sector itself.
The introduction of a mandatory levy payable by operators for research, education and treatment (RET) causes, as well as reclassifying video game loot boxes as gambling, were also considered as part of the assessment.
The report, commissioned by PGR and carried out by consultancy NERA, estimated that all of the above proposed reforms would result in a financial impact to operators of between £696m-£974m annually if implemented following the UK government’s Gambling Act 2005 review.
“The reduction in revenues to gambling operators from these reforms might reduce employment in the gambling industry,” the report stated.
“However, diverting expenditure by the public to other sectors which are more labour intensive than the gambling sector could create up to 30,000 new jobs, and employee earnings could increase by up to £400m,” NERA added.
According to NERA estimates, the UK government spends between £270m-£1.1bn in additional costs relating to individuals experiencing gambling-related harm, primarily through healthcare costs.
“It may be possible to reduce those additional costs through the recommended reforms and an effective RET programme, though it is not possible to say precisely how much could be saved on the basis of the evidence we have reviewed,” NERA stated.
In respect of gambling sponsorships in sport, the report estimates a blanket ban would cost the English Football League (EFL) £26m, or 2.5% of its total revenue.
Of this reduction, £20m would be wiped out as a result of the cancellation of Sky Bet’s existing sponsorship of the EFL, with the remaining £6m coming from the 12 EFL teams with gambling sponsorship deals in place.
The cancellation of Betfred’s sponsorship of the Rugby Football League would result in an annual loss to the RFL of between £500,000 and £950,000 or between 2-4% of total revenue, according to NERA.
“The sport leagues and teams we have assessed are unlikely to be significantly harmed by a ban on direct sponsorship, as gambling sponsorship revenue is a small revenue source relative to the total, and non-gambling sponsors exist to fill any gap created,” NERA added.
Addressing the conclusions of the report, PGR chairman Lord Foster of Bath claimed there was an immediate need to reform the UK gambling industry.
“This report clearly sets out the economic benefits of reforming the gambling industry with tax revenues looking set to increase, jobs that could be created and a boost to funding for research, education and treatment,” Lord Bath said.
“The evidence base and now the economic case for reform have now been made. This government now needs the resolve to get on with it,” he added.