Guidance
Advice to the Gambling Commission on a statutory levy
A paper by the Advisory Board for Safer Gambling advising the Gambling Commission on a statutory levy
Section 5: Challenges to implementation
Establishing the required level of funding, and the size of the levy
A primary benefit of a statutory levy is that it would substantially increase the volume of funding to provide effective research, education and treatment strategies to deliver a transformative change in approach to reducing harms.
Establishing the level of the levy creates challenges. The House of Lords report sets out are options to achieve this94.
To understand the total amount required we can draw on evidence from other jurisdictions and delineate the range of NHS and third sector services that are required (see Appendix 2) – making comparisons with the costs of other comparable treatment services in Great Britain. Information from the forthcoming evidence review by PHE will also inform this needs assessment95,96.
To date, a broad-based figure of one percent of GGY is the one that has been most widely proposed for the GB context. This approach would avoid the delays and complexities that would be inherent in a so called ‘smart levy’ – where the formula for calculation would be a matter of dispute between sectors and operators. Moreover, unlike the sugar ‘smart levy’, where the tax has the effect of encouraging producers to find ways to reduce sugar content, it is hard to see how a smart levy on gambling could incentivise operators to offer less risky products. The evidence from longitudinal studies does not support the suggestion that there are clear differences in problem gambling rates across different products which could provide an evidence base for formulating a levy. One study found that frequency of purchase of scratchcards was a strong predictor of subsequent problem gambling across time periods. In effect, these types of play can act as part of a pathway to more harmful gambling activities97. A levy on a fixed proportion of GGY avoids these difficulties and creates a clearer and fairer approach to determining how much each operator should contribute.
At current rates a one percent GGY levy would provide £144 million per year98. Whilst this may be the most widely proposed figure, we note the following points of caution:
- It is vital that industry do not view a contribution of this level as discharging their full duty with respect to preventing and treating gambling harms99;
- Experience of other levies shows that once a level is set, they tend to persist. We therefore recommend that the system allows the levy level to flex in response to new evidence and be formally reviewed after two years. This review should take into account factors such as findings of evaluations on what works and research on needs across geographical areas and demographic population groups.
- Business to business companies who provide gambling products do not generate Gross Gambling Yield but do derive profits from their products. A statutory levy would need to be able to obtain contributions from these companies.
Despite the challenges, a one per cent of GGY levy would create the step change in funding that is needed. Great Britain lags behind other jurisdictions in terms of its investment in reducing gambling harms. Countries with well-established government infrastructures and sustainable funding via public health bodies and research councils have a significantly higher ratio of spend per high risk (problem) gambler100. Table 2 shows the relative spend per person, in three comparable jurisdictions101.
Table 2: Research, Education and Treatment spend in four jurisdictions (2018)102
| Jurisdiction | RET Spend per problem gambler | RET spend (£M) | Estimated number of problem gamblers |
|---|---|---|---|
| Great Britain | 19 | 8.26 | 430,000 |
| Australia103 (3 states) | 368 | 36.58 | 92,138 |
| Canada104 (8 states) | 329 | 43.94 | 145,847 |
| New Zealand | 413 | 9.70 | 235,000 |
The percentage set in other jurisdictions varies. For example, in Ontario, Canada, two percent of gross revenue is allocated by the Ministry of Health and Long-Term Care to fund research and treatment. In New South Wales Australia the levy is also currently set at two percent of gaming revenue, whereas in Victoria the rate is currently 0.68 percent. In New Zealand, the Gambling Act contains a formula for calculating a levy for each sector, using player expenditure and numbers presenting for treatment as part of the calculation, for example the rate for casinos is 0.56 percent and non-casino gaming machines 0.78 percent105.
As noted earlier, evidence from other jurisdictions has suggested that the harms from gambling are of similar magnitude to those of alcohol dependence. Gambling disorder is now classified within the World Health Organisation International Classification of Diseases as a behavioural addiction. It can co-occur with other addictions. However, monetary resources for gambling treatment compare poorly to resources made available for alcohol treatment, as shown in Figure 2.
Figure 2: Treatment spend on addictions in England 2016/17
Figure 2 shows that only £15 per person is spent on treatment for gambling disorder, compared with £370 for those with alcohol dependence and £380 for those with drug dependence. If gambling treatment was to be given similar fiscal parity to these two public health issues, the spend on treatment alone would total £1.25 billion, compared to the current spend of £5.5 million. Moreover, this only focuses on one aspect of spend: treatment.
The UK government is also committed to funding prevention for alcohol and drug misuse, noting that interventions result in a social return on investment of £4 for every £1 spent on drug treatment, and £3 for every £1 spent on alcohol treatment (over ten years)106. Whilst the evidence base for what works in gambling harms prevention is in its infancy, a focus on prevention is of primary importance. Drawing on the examples of alcohol and drug dependence strategies, prevention should be considered a priority for significant investment to help develop this evidence base. Research that develops understanding of the inequality in participation and harm is a crucial part of this. Equally challenging are estimates for funding required for research. As noted in Table 1 above, NIHR and RCUK-funded studies for alcohol outnumber those for gambling by a ratio of 31 to 1. To gain equity with alcohol research also requires significant investment.
Ensuring an independent governance infrastructure:
Under current legislative requirements, the proceeds from a statutory levy would be managed by the Gambling Commission. The Gambling Commission would therefore need to establish an infrastructure for distributing these funds. We recommend these should be overseen by a new independent Safer Gambling Levy Board, which could share features with the National Lottery Distribution Fund, the National Lottery Community Fund107 and the Horserace Betting Levy Board108,109.
The requirements of the Board should be that members are free from associations with industry, either perceived or actual, and should not be recipients or potential recipients of the levy monies. The Safer Gambling Levy Board should include at least one member who is an expert by experience110. They should hold expertise in areas needed to support the effective distribution of funds in line with the Commission’s National Strategy for prevention of gambling harms.
The Safer Gambling Levy Board could also play an oversight role in the governance and co-ordination of Regulatory Settlements, one of the Gambling Commission’s enforcement tools for addressing operator’s regulatory failings.
The Safer Gambling Levy Board should use public body infrastructures to support the dispersal of funds. In the case of treatment and prevention this would include the NHS’s GB wide primary and secondary care services, public health and education and third sector provision. In the case of research, this should include dispersal through research councils, drawing on expertise applied in other sectors. However, the Safer Gambling Levy Board would also need the capacity to critically assess gaps in research and any challenges of using existing infrastructure and propose independent ways to address these gaps. For example, funding through independent research councils lends itself to larger, longer-term projects. A smaller funding track (or rapid response research fund) for enabling this kind of work to occur may be needed, especially if gambling research and insight is to keep pace with rapid change and technological developments within the industry.
The approach described above is used to address other major public health issues in the UK. For example, the NIHR PHR Programme has a rapid funding stream which facilitates a rapid response process. There is a general acceptance across all specialities funded through NIHR that digital related research requires a rapid process to keep up with changing forums and behaviours - this is linked to the new NIHR approach of making research more real-world and systems wide so that is relevant to local and national policymakers. Oversight and distribution for this smaller funding track could either be distributed to a funding council or be provided by the DHSC for England and the Government Health Departments in Scotland and Wales. Finally, the Safer Gambling Levy Board would hold a public register of all gambling related research, with a record of outputs, where applicable.
Ensuring that levy funding is only used for gambling-related harms
Some have argued that funding which is generated out of general taxation rather than a levy would be preferable111,112. In New Zealand, this issue has been addressed through a “tax and recover” model, whereby funding for research, prevention and treatment is directed through the Ministry of Health through funds from general taxation but costs are recovered by Treasury from a levy on industry. This provides a further level of separation between industry contributions and spending.
Under current legislative requirements in Great Britain, statutory levy funds would be paid to the Gambling Commission. However, the principle of structural de-coupling could be introduced in other ways. For example, with regards to research, funding could be directed through independent infrastructure, such as the existing research councils.
Our assessment is that in the context of competing priorities for resources, it is unlikely that gambling would ever be allocated the full resources from general taxation needed to effectively reduce harms. Hypothecated duties and levies are increasingly used for ring-fencing public expenditure in the UK as well as elsewhere. Notable examples include:
- Sugar Tax - where all monies go to school sports and other activities to improve health113.
- Vehicle Excise Duty – which, from 2020, is used to fund the majority of Highways England budget114,115.
- Apprenticeship Levy – where companies pay 0.5 percent of turnover for apprenticeship training.
- Illegal Money Lending Levy – paid by banks and other financial institutions to fund action against illegal lending116,117.
- Community Infrastructure Levy – where developers pay a proportion of funds to local authorities that is allocated to community infrastructure projects.
Making it a continuing regulatory requirement to enforce safer gambling:
One challenge of implementing a statutory levy is ensuring that industry do not view this as discharging their full responsibility in terms of safeguarding and protection from gambling harms. Some operators have invested in internal processes and procedures to enhance their ability to reduce harm but there is a need to ensure that all parts of the industry engage with this.
The Commission would continue to make it a requirement of licencing that operators invest in safer gambling practices, and carry out internal audits to ensure compliance with safer gambling standards are met. The levy would not replace the investment required to sustain this. A statutory levy should be the external-facing element of industry responsibilities whilst maintaining a commitment to their internal responsibilities to promote safer gambling amongst their customers and to take action to reduce risk. Any introduction of a statutory levy will require careful framing and communication to ensure both external and internal responsibilities are maintained.
References
94 (Page 142) Gambling Harm - Time for Action (opens in new tab) , House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry July 2020
95 Gambling-related harms evidence review: scope (opens in new tab), Public Health England, October 2019
96 Harms associated with gambling: abbreviated systematic review protocol (opens in new tab), Benyon et al, Systematic Reviews, June 2020
97 Quinte longitudinal study of gambling and problem gambling (opens in new tab), Williams et al, 2015
98 The GGR of the GB gambling sector has shown a sharp increase over the current decade but much of this was because of the change to point of consumption licensing, which gave a once-and-for-all boost of perhaps £2m per annum. Since then the growth has failed to keep pace with inflation and GGR has fallen a little even in nominal terms in the past year. The initial real level of resources generated by the levy will therefore vary over time.
99 We remain to be convinced that the current voluntary system has a demonstrable positive effect on the Gambling Industry’s commitment to other safer gambling activities.
100 Evidence Exchange Brief - Systems of funding for gambling research (opens in new tab), GREO, January 2020
101 (Page 7) Reviewing the research, education and treatment (RET) arrangements (opens in new tab), Gambling Commission, February 2018
102 Based on statistics from: (Page 7) Reviewing the research, education and treatment (RET) arrangements (opens in new tab), Gambling Commission, February 2018. NB – A number of caveats apply to the figures quoted in Table 2 – as set out in the Gambling Commission’s review document. For example, they do not capture money donated in GB to recipients other than GambleAware. Nor do they capture expenditure in health systems in each jurisdiction to support people with co-morbid conditions. The figures are intended for illustrative purposes only.
103 Figures represent combined states
104 Figures represent combined states
105 Evidence Exchange Brief - Systems of funding for gambling research (opens in new tab), GREO, January 2020
106 Alcohol and drug prevention, treatment and recovery: why invest? (opens in new tab), Public Health England, February 2018
107 The National Lottery Distribution Fund (NLDF) was set up when the National Lottery was formed in 1994 to receive and hold monies generated by the National Lottery for good causes. Funds held in the NLDF are apportioned to the arts, sport, national heritage and community causes based on a set percentage detailed in the National Lottery etc. Act 1993 (opens in new tab). Each distributing body run a series of grant programmes to distribute the funds to beneficiaries/good causes. The National Lottery Community Fund, which receives 40% of the funds, is one example of a distributing body. The National Lottery Community Fund is a non-departmental government body which is governed by a Board comprising the Chair (who is the Chair of the UK committee), the chairs of each of the four country committees and up to seven other members. The Board sets the Fund’s Strategic Framework, and each committee working within this framework has delegated authority to determine the programmes delivered within their country. They also make grant decisions, or agree the delegated arrangements for making them, within their programmes.
108 Horserace Betting Levy Board (opens in new tab) - website
109 (Page 142) Gambling Harm - Time for Action (opens in new tab), House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry July 2020
110 The Levy Board should also link in to structures being developed in Scotland, Wales and England to involve a wider network of experts by experience in the implementation of the National Strategy for Reducing Gambling Harms.
111 Gambling Research and Industry Funding (opens in new tab), Collins et al, Journal of Gambling Studies, 2019
112 Funding of gambling studies and its impact on research (opens in new tab), Nikkenden et al, Nordic Studies on Drugs and Alcohol, 2019
113 Soft drinks levy comes into effect (opens in new tab), HM Treasury, April 2018
114 Roads funding: information pack (opens in new tab), Department for Transport, 2018
115 Vehicle excise duty (opens in new tab), House of Common Library, November 2017
116 Stop loan sharks (opens in new tab) - website
117 Illegal money lending levy (chapter 13) (opens in new tab), FCA handbook, FCA, November 2019
Advice to the Gambling Commission on a statutory levy: What could a statutory levy achieve? Next section
Advice to the Gambling Commission on a statutory levy: Transitional arrangements
Last updated: 27 October 2023
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