The industry levy: £25 million would be a more appropriate target for the annual contribution of the British gambling industry to research and treatment.
The new Responsible Gambling Trust, the Gambling Commission, and the Department for Culture, Media and Sport Committee, have all suggested that we should view the £5 million now contributed annually by the gambling industry as a success, indeed something that the nation should be proud of. Gambling Watch UK sees it differently. Let's leave aside the question of whether a levy on the gambling industry is the appropriate way to fund gambling research and treatment – Gambling Watch UK believes it is not. If, for now, that is to be the way that the study and treatment of the harm caused by gambling is to be funded, then what is a reasonable target for the industry levy? How was £5 million annually agreed upon? Presumably it was as a result of some behind closed doors negotiation during which arguments about how difficult life was for the industry (see the recent report of the Department for Culture, Media and Sport Committee for considerable evidence of such arguments being used) and how little they could afford were important contributors.
£5 million, as everyone knows, is a very small amount of money to address any problem on a national scale. It is also very small as a fraction of total British gambling industry takings. According to Gambling Commission Industry Statistics for 2010-11, Gross Gambling Yield (GGY), for all forms of gambling regulated by the Gambling Commission combined, amounts to approximately £5.6 billion. The current £5 million target for the levy therefore represents about a tenth of one percent of GGY. If the levy target was to be based on industry takings, what is a reasonable percentage? One way of arriving at a figure would be to base the percentage on the estimate of the British adult gambling problem prevalence produced by the most recent, 2010, British Gambling Prevalence Survey. The two separate estimates produced by that survey were 7 and 9 per thousand of the population. Taking the average of those two figures, it could be argued that it would be reasonable for the levy target to be set at 0.8% of GGY. That would suggest a levy target of approximately £45 million, getting on for 10 times the present target.
An alternative basis for arriving at a target could be an estimate of the percentage of GGY which secondary analysis of the 2010 British Gambling Prevalence Survey data has suggested is contributed by people with gambling problems (see gamblingwatchuk.org/research). Because people with gambling problems spend more than the average, this percentage is much higher than the prevalence estimate, although it varies greatly by type of gambling (from around 5% for bingo and football pools gambling to around 25% for betting on dog races and playing Fixed Odds Betting Machines). In total the best estimate is that around 14% of takings on forms of gambling regulated by the Gambling Commission come from people with gambling problems, which translates into a staggering £780 million annually?
Gambling industry profits are of course only a certain proportion of GGY, after subtracting taxes, duties, licences and operating costs. In 2000 KPMG, in its report for Business in Sport and Leisure, estimated that British gambling industry profits were approximately 18% of GGY (excluding the National Lottery and non-profit-making forms of gambling). Total profits may therefore be of the order of £1bn of which 14%, or £140m may be coming from the pockets of people with gambling problems.
Whichever method is used, the present target of £5 million is put into proper perspective. Not only is it a pitifully small amount in relation to research and treatment needs, but it also represents a tiny proportion of the gross yield from gambling and nowhere near what is reasonable in relation to the prevalence of problem gambling and the percentage of industry profits coming from people with gambling problems. Our rough calculations have suggested figures of £45m and £140m both of which are so far in excess of the present target that they would certainly be unacceptable. As a compromise, Gambling Watch UK suggests a target of £25 million, to be achieved over the next five years. This is five times the present target, and seems to Gambling Watch UK to be much nearer to a figure which could really be called a success and something the British could be proud of.