Should online gambling gains be taxed more to pay for social services giving the considerable social harm gambling addiction inflicts on us...?
The policy background to this is the 2005 Gambling Act, introduced by Gordon Brown's New Labour, which opened the floodgates to an expanding online gambling sector.
Regulation at the time was written to permit expansion while providing consumer safeguards. However, the acceleration of remote gambling firms has outstripped such objectives to build massive profits alongside astronomical social damages.
The UK Gambling Commission, in 2024, reported that online gambling, casinos, and slots accounted for a substantial 40% of the £15.1 billion industry turnover, whie the social costs of gambling dependency according to research from Public Health England is estimated at £1.27 billion per year in health, welfare, and criminal justice impacts, 2021 figures.
The question is whether the gambling companies' profits should be taxed more to offset these external expenditures.
Taxing Vice or Killing Growth?
Gambling taxation regimes differ hugely: Delaware charges a 57% tax rate on online gambling, while Pennsylvania doesn't have one.
UK taxes are comparatively low, at around 21% of gross gaming yield for online gambling (GOV.UK, 2024) which puts gambling gains in line with income and capital gains tax.
However other 'sin taxes' in the UK are huge: tobacco (80%) or alcohol (70%) which is way over that 20%....
To increase gambling taxes or not...?
Labour Chancellor Rachel Reeves is anxious not to put too many demands on the industry.
And excessive taxation does threaten to drive gambling business abroad, where tax and regulation are more relaxed, and online gambling companies are hardly having to be rooted in place!
A possible middle ground would be earmarked levies: hypothecated levies expended directly on addiction treatment, welfare support, and educational programs. The NHS is presently spending £100 million per year on gambling harm treatment (House of Commons Library, 2023). Linking the income from gambling tax to expenditure on these services directly could render Reeves' policy socially and politically acceptable.
Final thoughts...
The gambling industry is a potentail golden goose for increasing tax revnue, but one which feeds on social ills.
It's not likely to go anywhere, and part of me thinks it's fair enough to give people the opportunity to fuck up big-style.
I do like the idea of offsetting the cost of harms with a targeted levy, but then again that brings into question the problems with measuring those costs, but that is a whole nother story!