British trade association the Betting and Gaming Council (BGC) has insisted it would welcome a mandatory levy on gambling firms, but has urged the government to adopt a tiered approach when deciding how much operators should pay.
Background context
Members of the BGC – consisting of operators representing the vast majority of the UK’s gambling industry by amount of revenue generated – have long been committed to a voluntary levy funding research, education and treatment (RET) in the area of gambling-related harm.
That levy is currently set at 1% of the operators’ revenue annually, with funds distributed among independent charities aimed at reducing gambling harms among the UK population.The voluntary levy currently supports an independent network of charities, which treats around 85% of all problem gamblers receiving treatment in the UK, according to the BGC.
The association also points out that its four largest members alone have pledged a significant increase to the amount contributed through the levy in recent years, with the country’s top operators expected to provide an additional £110m to the funding between 2019 and 2024.
Operators that pay the levy have no say in how or where the funds are spent as they are allocated independently, a system which the BGC insists must be maintained alongside any changes in the government’s upcoming Gambling Act review.
Last year, the association itself proposed to the government that the contributions should be made mandatory under UK gambling laws.
Enter the white paper
After several long delays to its progress, the UK government is finally expected to introduce its Gambling Act Review white paper this year.
As reported in several media outlets including the Financial Times and Daily Mail, many expect a mandatory levy to replace the current voluntary system, a prospect which has led the BGC to speak out today (3 April).
“BGC is concerned the government may announce in its forthcoming white paper a blanket 1% fee on all members,” the trade association said.
“Just like other businesses working on the high street or in the hospitality and entertainment sectors, land-based operators, like bingo, casinos and betting shops, are facing severe economic headwinds, including a slower than expected post-Covid recovery, rising fixed operating costs and high inflation, as well as pressures on customers caused by the cost-of-living crisis.”
Those factors, it suggested, would lead to land-based operators paying an unfairly high proportion of their profits when compared to their online counterparts.
“BGC industry analysis suggests a new blanket 1% statutory levy to land-based operators would be the equivalent of between a 10% and 15% hit on post-tax profits, because of the fixed costs which do not equally apply to online operators,” it said.
CEO’s comments
BGC CEO Michael Dugher added in a statement today: “I have said for some time that I am relaxed about a so-called statutory levy given that the money is already on the table from BGC members, it is already allocated independently of the industry and given that it was the BGC who proposed to government last year that contributions should be mandatory.
“But we want to see continued sustainable funding for RET provided it recognises the fact land-based operators are under greater cost pressures, so there has to be appropriate mitigation, and that funds continue to be distributed effectively and genuinely independently.
“Our largest members already pay 1% to fund Research, Education and Treatment services via a wholly independent system. For the BGC and our members, the priority is ensuring the money reaches charities doing exceptional work and funds truly independent, evidence led research. The mechanism used to generate those funds is an irrelevance by comparison.”
Dugher suggested that the most important question is where the money ends up, rather than where it comes from.
“What’s important is that the money goes to helping the tiny minority of people who need it, not wasted on the cottage industry of anti-gambling prohibitionists, masquerading their biased work as ‘research’,” he said.
“But most importantly, any new system must be tiered to protect land-based operators like bingo, casinos and betting shops, who have disproportionately higher fixed costs because of buildings and tens of thousands of staff.“They are still struggling post-covid, like every other retail, hospitality and entertainment business, with all the difficult economic headwinds.”
The land-based gambling sector is a major source of employment in the UK in addition to the tax contributions it makes each year.
Around 15,000 jobs are supported by the land-based casino sector while a further 42,000 people are employed in the land-based betting sector, the BGC suggests.
Is 1% too much, or not enough?
Elsewhere, some have suggested that a 1% levy on industry revenues is insufficient given the financial and social cost of gambling-related harm in the UK.
Christian organisation CARE, for example, has released a statement today calling for a statutory levy to be set at 5% for all gambling operators.
“[The] money given by the industry falls far below what is needed to help all those affected by harmful gambling, and NHS addiction services refuse to accept gambling industry money for ethical reasons,” it said.
CARE’s gambling policy lead Tim Cairns added: “The gambling industry boasts profits of almost £15bn per annum from British punters. These profits come at a high cost to the public. Gambling addiction shatters individuals, families, and communities.
“Tragically, there is one gambling-related suicide every single day. It is past time big betting was made to pay. Under current rules, betting companies make voluntary contributions towards addressing gambling harms. But these contributions are woefully inadequate.”
Cairns went on to suggest that the additional £110m pledged by the UK’s four largest operators “isn’t even a drop in the ocean” of the £240m it estimates is required to treat gambling-related harm in the UK each year.
The BGC, meanwhile, points out that the voluntary 1% RET levy contributed by its members is paid in addition to the £4.2bn contributed in taxes by the industry each year, which already helps to fund NHS services.
Will it go through?
It is not yet certain what policies will be introduced in the forthcoming white paper.
While media sources have suggested a mandatory levy is likely, Prime Minister Rishi Sunak previously objected to the policy when he served as Chancellor of the Exchequer under Boris Johnson, according to sources in the Mail.
“Rishi opposed it on the grounds that we pay billions in tax already and he didn’t want to look as if he was in favour of new ‘nanny state’ taxes on business,” one source said.
“He also has the Catterick racecourse in his constituency, and was worried that it would hurt racing.”A review of the 2005 Gambling Act was commenced in 2020 but faced several delays during a period of political turmoil in the UK, which has seen three Prime Ministers hold office since then.
The review has been continually pushed to the bottom of the government’s agenda, creating significant uncertainty for the country’s gambling sector as rumours of what might be included continue to spread.
In addition to the introduction of a statutory levy on revenues, new rules on advertising and sports sponsorships, stake limits for online casinos, and a partial liberalisation of the land-based casino sector have all been touted as possible changes coming to the sector.