Is there a mandatory graduated ‘smart’ gambling levy on the horizon?

Yesterday (7 June 2022) a Westminster Hall debate took place on the question of a Statutory Gambling Levy to fund problem gambling research, education and treatment.

The House of Commons Library debate pack, published ahead of the debate (on 26 May 2022), stated as follows:

The Gambling Act 2005 regulates gambling in Great Britain. The Act has three licensing objectives:

  • preventing gambling from being a source of crime or disorder, being associated with crime or disorder or being used to support crime.
  • ensuring that gambling is conducted in a fair and open way.
  • protecting children and other vulnerable persons from being harmed or exploited by gambling.

The Act is overseen and enforced by the Gambling Commission. Under section 123 of the Act, the Secretary of State for Digital, Culture, Media and Sport can make regulations requiring gambling companies to pay an annual levy to the Commission. Money from the levy can be used for projects relating to: 

  • addiction to gambling.
  • other forms of harm or exploitation associated with gambling.
  • any of the Act’s licensing objectives.

Section 123 has never been commenced.

The DCMS’ Gambling Act Review (December 2020) sought views on, among other things, the Gambling Commission’s resources. The Government has not yet responded but has said it will publish a gambling white paper “in the coming weeks”

Funding to prevent and treat gambling-related harm

The Gambling Commission requires all licensed operators to make a voluntary contribution of 0.1% of net revenue towards the research, prevention and treatment of gambling-related harm. Most operators donate to GambleAware, a charity tha commissions support for problem gamblers, as well as research and awareness-raising on gambling-related harm. In July 2019, Jeremy Wright, the then Secretary of State announced that five of the largest operators (William Hill, Bet365, GVC, Flutter, and Sky Betting and Gaming) would increase their donations from 0.1 to 1% over the following four years.

During a House of Lords debate on 27 April 2022, the Government said that if the existing system failed to deliver the money needed, it would look at options for change, including a statutory levy.

Criticism of the current funding model

Critics claim the current funding arrangement does not generate enough money to prevent and treat gambling-related harm – see, for example:

In a September 2020 paper for the Gambling Commission, the Advisory Board for Safer Gambling said the current funding system was “no longer fit for purpose”. A statutory levy would address issues of transparency, independence, equity and sustainability and public confidence. It would also have the potential to raise “significantly greater levels of funding”.

In April 2022, GambleAware called on the Government to introduce a mandatory levy of 1% of GGY. According to GambleAware, this would raise £140 million annually and would “enable better longer-term planning and commissioning for services to prevent gambling harms”.

What has the gambling industry said?

In a May 2022 blog, Brigid Simmonds, Chair of the Betting and Gaming Council, claimed a statutory levy would not make a “tangible difference” to research, education and treatment (RET) or to problem gambling rates. She said the current funding system was “making good progress” and warned that the “clumsy one-size-fits-all approach” of a statutory levy would have a “disproportionate effect” on land-based operators (casinos, betting shops and bingo halls) that were just recovering from the Covid-19 pandemic.

Opening the debate, Carolyn Harris MP (Chair of the Gambling Related Harm All Party Parliamentary Group) made a forcible case for introduction of a graduated (or ‘smart’) statutory gambling levy, stating:

It is clear to see that the voluntary levy is not fit for purpose. What is the solution? Well, a solution is already in place and available: it is set out in the Gambling Act 2005. There are already provisions in legislation for the Government to place the collection of levy donations on a statutory footing should the voluntary arrangement be shown not to work, which clearly it does not. DCMS should use existing powers to require operators to pay an annual levy to the Gambling Commission. A joint advisory levy board should then be given oversight of the levy paid. That would be a formal cross-Government working group led by the Department of Health and Social Care. The levy board should oversee a comprehensive assessment of the evidence base of gambling-related harm and the limitations of the current voluntary system.

It is also crucial that the levy is graduated or smart. By that I mean that when considering the options for calculating the statutory levy, officials have devised a formula that requires companies offering potentially more harmful gambling products to pay a correspondingly higher proportion of the levy—more simply known as a “polluter pays” principle. This has precedent in New Zealand, where the gambling problem levy is set by an Order in Council and reviewed every three years. A lottery provider, bingo hall or high street bookie or casino will pay far less than a giant monopolised online gambling operator. There is also precedent in the UK: the Financial Conduct Authority already operates a similar system for financial services organisations, where a statutory levy is imposed on firms to fund free-to-client debt advice according to the “polluter pays” principle.

If it was brought in by the DCMS, a 1% levy on industry revenue would provide £130 million of funding for research, education and treatment. That would massively improve the disparity between other nations’ spending and that of the UK. Australia spends £368 per gambler, Canada spends £329 per gambler and New Zealand spends £413 per gambler. The UK spends £19 per gambler. If we had funding for research, what could we do? We would finally be able to hold a proper prevalence survey, not wholly inadequate telephone surveys of a few hundred people, to ascertain exactly how many people in the UK are suffering gambling-related harm, so that we can get them the help they need. There would be improvements in research and data for clinical outcomes, along with the quality of data collection, to ascertain how gambling treatment clinics are performing and what more could be done to improve treatments.

With better and more certain funding for education, we can prevent people falling into the hands of gambling operators in the first place. We can highlight ways to set up banking blocks, deposit limiters, advice services and many more tools, not only to teach people about the dangers of some gambling products, but to signpost those who are already addicted towards help.

Finally, and probably most importantly, we come to treatment. Treatment for gambling addiction in the UK is completely inadequate. Chronic underinvestment in the gambling treatment system, as a result of the current voluntary levy, has led to a scenario in which treatment is unregulated, unaccountable and fails to use the evidence base in its strategies. Only between 2% and 3% of people with gambling problems enter the treatment system, all of whom are self-referrals. With a statutory levy, that can change.

Indicating her satisfaction that a top rate of 1% GGY would suffice for a mandatory RET levy, she added:

I have no intention of forcing any argument that the levy should increase. I am just asking for common sense, and for the worst polluters to give 1%. I will then walk away from this argument, quite satisfied that my job is done.

The truth is that the most toxic forms of gambling, which cause extensive harm, have the means to pay for the harm they cause. The industry will say that levels of problematic gambling are low. Tell that to the families at the back in the Gallery who have lost children. Tell them that problem gambling rates are low. We are having this debate because of the industry’s reluctance to do the right thing. It reacts to our reform recommendations with petty name-calling and offers feeble attempts at self-regulation. For a cash-rich industry, its commitment to repairing the damage that it causes or to preventing it from happening in the first place is both pathetic and insulting. If a statutory levy is introduced alongside tackling the question of affordability, ensuring that people are not gambling more than they can afford, we can stop the vast exploitation that we have seen in recent years. If that is brought in alongside stake limits for online gambling, to give parity with land-based venues, we can ensure that people do not fall into the depths of addiction. If it is introduced with meaningful reform of gambling advertising, sponsorship and direct marketing, along with the ending of inducements to gamble, we can prevent the poisonous hold that operators have on people through their addictive products. It is clear to me that, without a statutory levy at the heart of the White Paper, this Government will have missed a once-in-a-generation opportunity to bring analogue legislation into a digital era, to radicalise a toxic environment and—without a shadow of a doubt—to save lives.

You can read an entire transcript of the debate on Hansard here.

Responding for the Government in the absence of the Gambling Minister, Chris Philp, DCMS Under-Secretary of State, Nigel Huddleston, said:

I will ensure that there is time at the end for the hon. Member for Swansea East (Carolyn Harris) to reply. I thank her for securing the debate and thank all those who have contributed today, articulating a variety of views in a genuinely constructive manner. She has been a staunch campaigner for gambling reform for a very long time and I thank her and other parliamentarians for the many meetings that they have had with DCMS Ministers over recent months and years. As has been mentioned, I am not the responsible Minister for gambling: the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Croydon South (Chris Philp), is unavoidably detained in a Bill Committee but I will ensure that he gets a full read-out of today’s debate.

It has been 17 years since the Gambling Act 2005 was passed and it is clear that the risks around harm and the opportunities to prevent it are different now from when that legislation was introduced. We must act to recognise that our regulatory framework needs to change. In recent years, the Government and the Gambling Commission have introduced a wide range of reforms to help protect, support and treat people who are experiencing gambling harms. The protections include the ban on credit card gambling, the fixed odds betting terminal stake reduction and reform to VIP schemes, as well as ongoing work to improve and expand treatment provision through the NHS and third sector. The review is an opportunity to build on those changes and ensure that we have the right protections in place to prevent harm.

As the hon. Member for Swansea East will appreciate, I cannot pre-announce what will be published in the White Paper, which we are finalising, nor can I comment on speculation in the media and elsewhere about its contents. However, I can say that I absolutely recognise the importance of sufficient and transparent funding for research to strengthen our evidence base, as well as for treatment to help those who need support. As part of the wide-ranging scope of the review––it is widely recognised as being wide-ranging––we called for evidence on the best way to recoup the regulatory and societal costs of gambling. We have been clear for several years that, should the existing system of taxation and voluntary contributions fail to deliver what is needed, we would look at a number of options for reform including, but not limited to, a statutory levy.

As hon. Members know, when the Gambling Act was introduced, the gambling industry agreed to provide financial support for tackling problem gambling, and the Gambling Commission requires operators to make an annual contribution to approved organisations, which deliver or support research on the prevention and treatment of gambling-related harms, as a licence condition. We considered that issue closely in 2018 as part of the previous gambling review, when much of the debate centred on the quantity of funding provided by the industry. Since then, there have been a number of changes to how much is given and how it is managed.

Since 2018 the Gambling Commission has improved transparency around the amount given by the industry to research, education and treatment, and which bodies it is paid to, and required operators to donate to organisations approved by the commission. Most donate to GambleAware, an independent charity with no industry involvement in commissioning decisions, and the funding in the system has also increased substantially. In 2019, the four largest operators committed themselves to increasing their contributions tenfold, including £100 million for treatment over the following four years. I think the hon. Member for Manchester, Withington (Jeff Smith) mentioned that contributions under the voluntary system were indeed £34 million last year, and they are due to reach £70 million by 2024. By way of context, £34 million is about 0.3% of GGY, which is about £10.2 billion.

Alongside that, the Department of Health and Social Care and the NHS are taking forward work to improve and expand treatment provision. The 2019 NHS long-term plan gave a commitment to expand the coverage of NHS services for people with serious gambling problems and announced the creation of 15 specialist gambling clinics by 2023-24, with £15 million of funding over the same period.

As my hon. Friend the Member for Blackpool South (Scott Benton) and others have commented, there are five NHS specialist clinics in operation, with a further three due to become operational by the end of this month. The Department of Health and Social Care is working with the NHS and GambleAware to help to improve the join-up between NHS and third-sector services, and to develop a clear treatment pathway for people seeking help.

The hon. Member for Sheffield Central (Paul Blomfield) again raised the tragic case of Jack Ritchie. In March, the hon. Gentleman secured an Adjournment debate on the coroner’s finding that gambling contributed to Jack’s tragic death. As the Under-Secretary of State for Digital, Culture, Media and Sport, my hon. Friend the Member for Croydon South, said then, the findings are an important call to action for our Department, the Department of Health and Social Care and the Department for Education.

As we said in our response to the coroner, the Government are committed to building on the reforms made since 2017 and addressing the concerns identified in the prevention of future deaths report. The coroner’s report and lessons arising from Jack’s tragic death are important inputs to our considerations and the review of the Gambling Act. I can assure hon. Members that, overall, the voice of people with personal or lived experience of harm was thoroughly represented among the submissions to our call for evidence, and I and my successors leading the review have met a number of people who have suffered because of their addictions or those of the people they love. I thank them for their contribution to the debate and the evidence gathering.

As part of the review, we are looking closely at the barriers to high-quality research, which were mentioned by many hon. Members, and how we can overcome those barriers. Building the evidence base to deepen our understanding of gambling can involve the input of a range of groups, including the Gambling Commission, researchers and the third sector. A good example is the research commissioned by GambleAware on the impacts of marketing and advertising on children and young people.

The research showed the impact that certain aspects of gambling advertising can have on young people, including depictions of the association between football and gambling, which I know is a hot topic. That pointed to the need for change to ensure that the UK advertising codes continue to provide effective protection from gambling advertising-related harms. The research has led to the Committee of Advertising Practice announcing stronger protections, which will be backed by the enforcement powers of the Gambling Commission. Those include banning content with strong appeal to children from gambling advertisements, as well as further changes to protect vulnerable people. Research on gambling, like any other subject, is funded by the research councils, and we want to encourage more researchers from a wide variety of disciplines to work in this area. We will say more about that in the White Paper.

I will briefly mention a few other points raised by hon. Members during the debate. The Gambling Commission has piloted a new methodology to measure problem gambling, and that is being worked on. The hon. Member for Strangford (Jim Shannon) mentioned gambling in Northern Ireland. Gambling is a devolved matter in Northern Ireland, but I believe new legislation is being brought forward there. I can confirm that officials have met to share experiences regarding the Great British legislation and regulations, so the conversations are ongoing.

On the effectiveness of GambleAware services, 70% of people who started treatment as problem gamblers were no longer defined as such on the problem gambling severity index at the end of treatment, and 92% saw their score reduced, so there is evidence of some impact.

Several Members raised the important role of the gambling sector’s tax contribution to the economy and the fact that those tax revenues are then used to fund our public services, including the NHS. Everybody has recognised, today or previously, that gambling can be performed safely by millions of people every year. Again, a very clear message from Members today is that nobody is advocating a complete ban on gambling. Of course, any changes must be proportionate and evidence- based, and where possible they must avoid unintended consequences.

The Government have an important responsibility to get reform right. We will build on the many strong aspects of our existing gambling regulatory system to make sure it is right for the digital age and the future. The White Paper is a priority for the Department and we will publish it in the coming weeks ….

In our view, it remains open to question whether the Government will introduce a compulsory RET levy in place of the current voluntary system but we can foresee a situation whereby Pamela’s Harris’s suggestion of a mandatory graduated (or ‘smart’) gambling levy could conceivably gather weight in the debate that will follow publication of the Gambling Act Review White Paper.

On that subject, it is worth noting that, in her opening speech, Harris talked about timing of publication of the forthcoming White Paper being “just a couple of weeks to go”. On being asked to explain his above comment “in the coming weeks”, Huddleston played a very straight bat, merely saying: “I can say no more than that we will be publishing in the coming weeks”.

NOTE: The blog by Brigid Simmonds (Chair of the BGC), referred to above (published on 5 May 2022) advocates a ‘tiered system’. It reads as follows:

A Statutory Levy would be a big step backwards in tackling problem gambling.

Far too often emotion, instead of evidence, drives the debate around betting and gaming in the UK. Nowhere is this substitution felt more keenly than in the discussion about how problem gambling is tackled through Research, Education and Treatment (RET).

It is a perplexing paradox. Every month, some 22.5 million British adults enjoy a bet. According to the independent regulator, the rates of problem gambling in the UK are now at 0.2 per cent, down from 0.4 per cent the previous year.

No one at the Betting and Gaming Council is complacent about this; however, those figures are positive when compared to other European countries. In Italy the rate is 2.4 percent, Norway 1.4 percent, and France 1.3 percent.

To any dispassionate observer, the obvious conclusion would be that Britain boasts a rigorously regulated market that is keeping rates of problem gambling low.

For the past twenty years, the industry has rightly shouldered the financial responsibility for that work by paying a voluntary levy to fund independent charities tackling problem gambling.

Despite that, anti-gambling campaigners are demanding a new Statutory Levy on the industry, a new tax by another name, to fund RET.

That poses a key question: would a Statutory Levy given to the Department of Health and Social Care really make a tangible difference to delivery of RET and problem gambling rates in the UK? The clear answer, for me, is no.

We believe the current system is making good progress, and in any event, a blanket levy would not raise materially more money for RET. But it would disproportionately hammer casinos and bingo halls, where a one per cent hit on net revenue equates to a 10 per cent hit on profits.

Under current arrangements, all companies regulated by the Gambling Commission are expected to make a voluntary contribution of 0.1 percent of net revenue. In the year 2019/2020 this was £10 million.

Most of this funding goes to GambleAware, which is a totally independent charity – the industry has no say on how it spends that money. In their five-year strategy, published last year, they say they expect to see income increase to £39 million by 2023/24.

The increase has in most part been made possible by the decision of the four largest gaming companies (Entain, William Hill, Flutter and Bet365) to increase their contributions to one per cent of net revenue, with a ratchet which began in 2020/21 that will reach the full one per cent by April 2024. That’s a total of over £100 million additional funding over four years.

All this funding goes towards tackling and preventing the causes of problem gambling, that is to say gambling that can have a negative impact on a player’s wellbeing.

Most problem gamblers do not thankfully suffer from addiction, and they need different, but nonetheless, important help. This is a distinct challenge to disordered gambling, or gambling addiction, which requires a clinical assessment. The two are often conflated, but they are entirely different.

If we were to compare betting to alcohol, you can see a parallel. For someone who drinks more than is good for them, that may have a detrimental impact on their wellbeing. But that is often manageable with advice and support, and wholly different from a chronic addiction to alcohol, which is where the NHS steps in.

Disordered gambling is a mental health problem and like many other mental health problems occurs alongside other addictions, like alcohol and drugs. It needs NHS care, but many of those who have different problems with gambling are helped by third sector charities, who are much better placed to help.

Despite this, the NHS still does not have a long-term strategy to tackle gambling addiction. It was only in 2019 that the Department of Health and Social Care announced they would open fifteen new NHS clinics for addicts, of which five are open and three more should open later this year.

Meanwhile the industry and charities have spent the last two decades busy getting on with the issue.

Currently, there around 160 locations used by charities for face-to-face counselling services, part of an already mature network of clinics, treatment centres and outreach programmes, which are making a real difference right now.

GamCare operates a National Help Line via telephone, face to face and online – and provides counselling services. An impressive 79 percent of users successfully completing treatment programmes.

Gordon Moody is a charity which provides residential treatment and over 70 per cent of those who use the service complete their treatment, while YGAM is educating a generation of school children, young people, and teachers about gambling harm and how to avoid it. There are many more.

A Statutory Levy would risk their funding models by potentially taking cash out of their coffers, and putting it into the NHS, which is not set up to deliver these services.

Furthermore, this clumsy one-size-fits-all approach would have a disproportionate effect on land-based operators including casinos, betting shops and bingo halls, which are only just recovering from the pandemic. In truth it would be catastrophic as they, like the rest of the hospitality sector, have so many fixed costs including staff, business rates, taxes and licences.

We say better to employ a tiered system which takes this into account, and would better protect jobs.

There is a clear argument that third sector charities are effective and making real progress. In contrast, a Statutory Levy looks like a retrospective solution for a problem that doesn’t exist at the levels anti-gambling campaigners want policy makers to believe.

Is it really designed to help RET or the general public – or is it a punitive measure to placate the anti-gambling lobby?

Any Statutory Levy will not boost funding for RET; the money is already in the system with a bigger, broader commitment going forward.

So think very carefully whether a statutory replacement would be better, would have better outcomes, and would help the vast majority of those who have a problem with gambling which can be helped outside of an NHS framework.