The impact of online betting on the UK economy

The United Kingdom tops the list in terms of online gaming popularity. The numbers have been rising steadily year after year, and, in 2018, finally reached the point where online gambling reached top of the leaderboard at 38.8% of overall gambling revenues.

That’s an extraordinary £5.6 billion in monetary terms, outstripping betting shops, bingo halls, land-based casinos, amusement arcades (both family-oriented and adult-only), and all forms of lotteries, including the National and EuroMillions.

There’s a little overlap here – the online, or ‘remote’ section of the gambling economy, as the United Kingdom Gambling Commission (UKGC) calls it – comprises online sportsbooks – the equivalent of a high street betting shop (only with better football odds and every other sport, for that matter), online casino gaming, online bingo, and online lotteries and participation in the national lottery.

Nevertheless, it’s safe to assume that as the remote section increases, the corresponding ‘offline’ equivalent is likely to scale somewhat proportionally.

The bettors are only one side of the tale

The gambling industry is one of the largest and most profitable in the UK, which is why the country seeks to tax and regulate it highly – in contrast to other countries who instead prefer to ban it because of the social harms they believe it can bring. 

Employment

The last year for which we currently have full data shows that in 2019, more than 50,000 staff were employed in betting shops, almost 12,000 in bingo halls, 13,000 in land-based casinos, a little over 10,000 in arcades, 6,500 technicians dedicated to servicing and auditing gaming machines, 1,000 in the lottery sector, and 10,000 in remote gaming. 

It’s a little surprising to see so few people working in the remote section of the economy, but then, an awful lot of UK citizens are working in Malta, Gibraltar, Alderney, and the Isle of Man for the various casino companies based there who focus on UK-based operations.

Still, 100,000 jobs are unquestionably a significant number.

Taxation

For the tax year 2020-2021, the treasury received £2.83 billion of tax from gambling companies. The previous year, when there were significantly more sporting events taking place, the total was £3.02 billion – that’s exactly double the figure from 2000-2001.

Why the UK has it right

With numbers such as these, some might question if the UK government is putting tax revenues, and a bump in the employment rate ahead of the well-being of its citizens. Nothing could be further from the truth.

Gambling is a Leisure Pursuit

In the year 2000, the government abolished all taxes on gambling winnings for UK citizens – gambling should be treated as a form of entertainment, not income, and therefore should be taxed as such. But the tax must come from somewhere, so it is the operators who pay instead.

While fewer people work in the online casino industry compared to the land-based casino industry, it is the online casinos who cover the higher tax burden, because they have lower overheads, staffing costs, and contribute less through income taxes compared to their land-based counterparts.

Online gambling offers valuable entertainment to those who enjoy it – some people love to check out the latest slots after a day at work, whilst others prefer the challenge of poker or blackjack. Online gambling is also more inclusive – those who find it difficult to get out of the house can now participate in their favourite games from the comfort of their own homes.

The UK has a tightly regulated industry

Strict rules and regulations are enforced to make sure that problem gamblers are noticed at an early stage. In house teams are on hand – often 24/7 – to assist players, help them set their limits sensibly, and even being willing to help players understand many of the vaguer terms associated with the gambling industry.

We mentioned in the previous section that tax allocations are divided proportionally between the online and offline sections of the market – this level of granular control is made possible by the UKGC, who compile annual reports which track every aspect of the industry in fine detail and make annual adjustments as and when required.

Responsible gaming controls are a mandatory feature of every online gambling site operating within the UK, requiring you to set play time limits, loss limits, deposit limits and the like. 

Taxes are levied at the point of consumption

Tax-dodging is a common feature of modern headlines, but the setup of the UK’s gambling industry ensures that the country reaps the economic benefits of allowing its citizens to gamble online. This point of consumption tax was recently raised from 15% to 21%, but we haven’t seen a mass exodus of gambling operators from the UK yet – and we aren’t going to. The sheer volume of players ensures that a well-run operator can still make generous profits whilst offering fair games and paying their staff well.

Sure, the UK has made it a pain to offer online gambling services in the country – many operators did pull out when the UKGC was given greater powers in 2015. Many wondered at the time if this would be a good thing or not, but overall, it has worked out well. 

The system the UKGC has created ensures that every penny of tax owed does make it back to the treasury, where it is then ploughed back into local communities, funds public services such as schools, libraries, and hospitals, and pays for the upkeep of amenities.