Peers for Gambling Reform Proposals Could Cost £1bn.
An economic assessment on a range of proposals to the gambling industry has been performed in a study by cross-party group Peers for Gambling Reform (PGR). In the worst-case scenario, the financial impact to the industry could be £1bn.
According to a new cross-party study, proposed reforms to the UK gambling market, including affordability checks, a ban on betting companies being involved with sports and a mandatory levy on gambling, could cost the industry as much as £974m per year.
The eye-watering figure was the findings of an economic assessment of selected House of Lords gambling reforms that was first proposed in 2020 in the House of Lords Select Committee on the Social and Economic Impact of the Gambling Industry.
Researchers modelled several different proposed changes to current gambling regulation and considered what financial impact these changes would have. Topics included affordability checks being introduced that could limit the amount each customer can spend at gambling sites. The research team also considered what a ban on advertising in sports such as football would cost, both directly to the industry and through other revenue streams such as taxation.
They also considered what impact a mandatory levy, often rumoured to be a high priority the UK government’s Gambling Act 2005 review, would cost the gambling industry. Researchers also considered what impact reclassifying loot boxes found in popular games such as the FIFA series of games to a form of gambling.
The report, which was commissioned by Peers for Gambling Reform (PGR) and performed by economic consulting firm NERA, estimated that if all reforms were introduced, the financial impact to operators would be between £696m – £974m each year.
The NERA report claims that job losses could result in the industry, but there could be wider society benefits, saying: “The reduction in revenues to gambling operators from these reforms might reduce employment in the gambling industry,”
However, diverting expenditure by the public to other sectors which are more labour intensive than the gambling sector could create up to 30,000 new jobs, and employee earnings could increase by up to £400m,” NERA added. The consultancy firm estimates that the UK government spends between £270m – £1.1bn per year tackling gambling-related harm, and reforms of the Gambling Act 2005 could reduce the burden on the government.
“It may be possible to reduce those additional costs through the recommended reforms and an effective RET programme, though it is not possible to say precisely how much could be saved on the basis of the evidence we have reviewed,” NERA stated.
The report also shows the direct impact a ban on sponsoring sport would have. In the EFL, it would cost £26m to terminate betting company deals. Sky Bet are the current league sponsors, and it would cost £20m to release the league from this deal. Twelve clubs would also need to end current deals, which would cost an additional £6m.
If a sponsorship ban is introduced, Betfred’s partnership with Rugby’s Football League would also come to an end, costing between £500,000 and £950,000 per year, which equates to 2.4% of the league’s total revenue.
“The sport leagues and teams we have assessed are unlikely to be significantly harmed by a ban on direct sponsorship, as gambling sponsorship revenue is a small revenue source relative to the total, and non-gambling sponsors exist to fill any gap created,” NERA added.