Setting the levy quantum and proportions across the gambling industry
In our Advice to Government - Review of the Gambling Act 2005 following the government’s Call for Evidence on the effectiveness of the Gambling Act 2005 (opens in new tab), we stated that it was important to ‘secure funding based on need, and this need must be defined by government.’. This is an area where we consider government will need to consider the issues, in particular the funding needs of those elements which they consider should be funded through a levy. By this we mean that, rather than setting a potentially arbitrary target for a levy, government may wish to build in consideration of the funding needs for each area of research, prevention and treatment and support or other elements of a levy structure in liaison across relevant departments and with relevant public bodies and charities. Government’s recently published consultation sets out their considerations to date on these issues.
In order to inform government's consideration of the proportions that different sectors within the gambling industry should pay, our research and statistics about the participation and prevalence of problem gambling and gambling related harm may be of interest. Any differential rates applied between sectors should be transparent.
Government may also wish to consider how it can ensure some stability over the short-term in order to achieve the desired levy amounts to meet funding needs and allow longer term commissioning, particularly in the transition period between the current voluntary system to a statutory levy. Stability over the short term would also have advantages in terms of administrative simplicity and efficiency.
In terms of calculating the levy amounts due, we understand government has considered calculating it by reference to Gross Gambling Yield (GGY), profits, and other examples.
We agree with the government’s considerations to date as set out in the consultation concerning linkages between regulatory fees and a future levy. The Gambling Commission’s fees are calculated by reference to the costs of regulating a gambling operator of the relevant category and size. It is not directly correlated with the potential harm connected with the gambling offered by that gambling operator. For this reason, we do not consider it appropriate to calculate the levy by direct reference to the Commission’s fees.
The amounts raised by a potential levy are likely to be much higher than the Commission's annual budget (perhaps by a matter of multiples). This means that any changes to regulatory fees would attract interest from stakeholders due, not to the fees themselves, but the consequential impact on levy costs for gambling operators and receipts for organisations. We do not consider this appropriate as decisions on the level of regulatory fees should be based predominately upon regulatory need.
We therefore recommended that a different data point is used other than Commission regulatory fees and our starting point is that GGY is the most commonly used reference point for most forms of gambling operators, and the reference point most simple for implementation. This does not apply to gambling operators such as society lottery providers where alternative points of reference are used.
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Levy advice - The administration of collecting a levy
Last updated: 16 November 2023
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