Gambling with the Future
It is a difficult time for the gambling industry in the UK with heavy regulations being announced on a regular basis. During May this year, the controversial decision was made to decrease the maximum bet on Fixed-Odds Betting Terminals (FOBTs) from £100 every 20 seconds to just £2. Following this, on October 21 2018, taxes on off-shore gambling companies were increased from 15% to 21% as a means to recover the loss in tax revenue from the FOBTs.
The increase in tax is forecasted to generate £120 million - almost offsetting the entire loss from FOBTs. A decrease in the maximum bet however was scheduled to be put into effect by April 2020 - a decision many in the Conservative Party are displeased with. The culture minister Tracy Crouch went as far as to resign, saying “two people will tragically take their lives every day due to gambling related problems and for that reason as much as any other I believe this delay is unjustifiable.”
A statement charged with compassion but unfortunately too idealistic. If on top of this, the industry is not given time to adjust and prepare for this change, the losses may be too much to handle. If the legal outlets to gambling were to be compromised, unregulated outlets that cause more social harm arise in the form of black markets. The government also requires time to plan how to deal with the loss of jobs this will cause - to limit unemployment. Gambling is like any other demerit good in the economy, although there are a lot of tragedies involved through its consumption, care must be taken when enforcing heavy regulations. Thus, resigning while appealing to the emotions of the public seems like an unappropriated move from the minister - as a thorough examination of the situation proves that the solution to the UK’s gambling problem is not as simple as increasing taxes.
Many had criticised the Labour party for being more liberal in their policies towards the gambling industry but the rates for percentage of population identified as incessant gamblers have stayed nearly the same since they the party came to power in 1997 - numbering at 1.2%. This is evidence that gambling victims are individuals who are vulnerable to engaging in risky behaviour, in which case the decrease in maximum bet may have been a better decision than simply increasing taxes.
The effects of this policy are still unknown and only time will tell its effectiveness. That said, with UK being considered a mature market at this point in time, heavy regulations such as the one mentioned above may cause a state of disequilibrium with spill-over effects that cannot be foreseen. Uncertainty has also been rising ever since announcements of Brexit and fluctuations in the Sterling - businesses may be less keen to invest after these two big hits to the industry.