PGR asserts betting industry profits ‘will exceed financial costs’ of reforms

Peers for Gambling Reform (PGR) has published the findings of its latest report, arguing that an overhaul of UK gambling laws would likely have positive societal outcomes on employment, tax revenue and employee earnings.

NERA was commissioned to undertake an ‘economic assessment’ of recommended industry reforms that have been suggested as part of the government’s generational review of the 2005 Gambling Act. These measures included:

  • Customer affordability checks 
  • Enforcing stake limits on high-risk online casino games 
  • The enforcement of a mandatory RET funding levy
  • Imposing blanket ban on sports sponsorships
  • Classifying loot boxes as new gambling verticals  

Commenting on the proposals, Lord Foster of Bath, Chair of PGR, said: “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. 

“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.

“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. 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.”

Each recommended reform was examined to gauge ‘hypothetical direct effects’ on the industry’s GGY, costs and tax liability outcomes.  

Researchers subsequently modelled the macroeconomic effects of revenue substitution away from gambling into related sectors of the economy using a ‘simplified input-to-output approach’. 

Regarding the impacts on the gambling sector, the report estimated that annual industry profitability would fall between three categories – £696 million (low impact), £819 million (medium impact) and £974 million (high impact).  

However, the report maintained that ‘industry profits are likely to exceed these financial costs, without taking into account any increase in prices or change in strategy that operators could implement in response’.

Placing these losses in context, the group pointed to the 2019 post-tax profits of five leading operators – GVC (now known as Entain), Flutter Entertainment, bet365, William Hill and Camelot – which totalled £697 million.

Although this figure falls below both the medium and high impact estimations, this total did not include bet365 CEO Dennis Coates’ £277 million 2019 salary – which rose to £424 million in 2020 – or the profits earned by other industry operators, which the report noted were not obtained.

Despite acknowledging that reforms ‘might reduce employment in the gambling industry,’ the report also argued that by diverting expenditure by the public to ‘other sectors which are more labour intensive’, the recommended changes could support up to 30,000 jobs and drive employee earnings up to £400 million.

In relation to taxation and government expenditure, the PGR report predicted that reforms would generate an additional of £68-£87 million in tax revenues, whilst £68-£87 million would be available for the Select Committee’s proposed research, education and gambling harm treatment programmes (RET).

Additionally, the report estimated that the UK government spends between £270 million and £1,170 million, primarily in healthcare costs, on supporting those who have experienced gambling related harm.

These costs, it said, could be reduced through the recommended reforms and via its proposed RET initiative – although the legislators did note that ‘it is not possible to say precisely how much could be saved on the basis of the evidence we have received’.

Outside of healthcare, further areas for cost saving identified by the PGR include: unemployment, homelessness and incarceration, all of which are dependent on the success of the recommended reforms in reducing gambling related harm.

In its scope of assessment, researchers highlighted the sector’s prevalence on online gambling as its GGY growth driver, underlining that online gambling businesses had been ‘subject  comparatively less scrutiny’ than their  land-based counterparts.  

Lastly, the report also addressed the issue of sporting finances. Although many leading sports figures have expressed concern that lower league clubs could suffer in the absence of sports betting sponsors, the PGR has asserted that the non-gambling sponsorships could ‘fill the gap’.

Although acknowledging that the English Football League (EFL) could lose up to £26 million and the Rugby Football League (RFL) could lose between £500,000 and £950,000 in yearly sponsorship revenue, the report maintained that this equates to only 2.5% and 2.4% of each body’s annual income.

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