Gambling Commission outlines levy
The Gambling Commission (UKGC) has finalised the rates for its mandatory levy. Originally proposed in the 2023 Gambling Act white paper, the levy came into force on 6 April this year. Designed to replace an inconsistent voluntary system, the new statutory levy ensures that all casinos and betting sites contribute fairly to the reduction of gambling harms.
Most online firms will pay 1.1% of their gross gambling yield, while land-based businesses face lower rates of between 0.1 and 0.5%. Expected to generate £100 million each year, the proceeds from the levy will go towards reducing gambling-related harms.
What is the levy for?
£100 million annually is a decent chunk of change, but what’s it going to be used for? Reducing the negative effects of the gambling industry is the core goal. The UKGC will focus on and split funds across three key areas:
- Preventing gambling harms
- Funding treatment
- Supporting research
The levy will be distributed amongst organisations and charities that focus on these three core areas. The Office for Health Improvement and Disparities (OHID) will be in charge of distribution in England, and in Scotland and Wales other health agencies will do likewise.
In implementing this levy, the UKGC hopes to build trust and transparency in the gambling industry, with Baroness Twycross, Gambling and Heritage Minister, calling it a “huge step forward” in reducing problem gambling.
How will the levy be collected?
The UKGC expects to collect around £100 million annually. To do this, they’re implementing a tiered system, where remote operators pay the most, and land-based operators pay the least.
In general, if you’re running a remote casino, bingo site, or betting site, then you can expect to pay 1.1% of your gross gambling yield (GGY). If you’re running a land-based casino or betting shop then it’ll be 0.5%, and most other gambling-based businesses will be paying 0.1% or less.
It’s interesting, but not entirely surprising to see lotteries pretty much getting away scot-free. The reason being that they contribute positively to society, with something like 28% of revenue going to 'good causes'. However, for the most part, the rates set for the levy seem fair.
The levy will be collected annually, with invoices sent out on 1 September each year and collections beginning on 1 October.
Allocating what’s collected
Allocating the funds collected is without a doubt a difficult task, and the one that’s caused the most concern. In England the Office for Health Improvement and Disparities (OHID) will be responsible for allocating what’s collected. In late 2024 they proposed that funds be distributed as follows:
- 50% or £50 million to treatment services
- 30% or £30 million to prevention services
- 20% or £20 million to research
Lots of charities will be vying for their share of the levy and each stream will be managed individually with funds allocated accordingly to different bodies. For example, in the treatment stream, the NHS will be using the funds to expand the National Gambling Treatment Network (NGSN). This will include NHS-run clinics and treatments as well as services delivered by charities and NGOs.
Treatment will cover everything from initial help (helplines, screenings etc) to specialist therapy and aftercare. This ensures that successful existing providers like GamCare, Gordon Moody, and others in the NGSN will continue to be properly funded.
The prevention stream will be led by OHID. They will coordinate national, regional, and local initiatives to ensure every level is covered – whether that’s broad national coverage, or small campaigns specifically targeted to smaller groups.
The research stream will mostly be administered through UK Research & Innovation (UKRI). As part of this, they’ll likely issue grants to universities and experts to study gambling addiction itself, as well as the effectiveness of intervention.
To ensure everything is spent accordingly, and funds used wisely, a Levy Board has been set up, as well as an Independent Advisory Group. Together, these groups will regularly audit how the levy is being used, ensuring transparency and effectiveness.
What does this mean? Implications and ramifications
What will the levy mean? There are three groups that this news will affect, players, the industry, and the general public. Let’s take a look at each in turn.
For players experiencing problems: First and foremost, the levy will certainly help players who are in need of assistance. Support services for those already affected by gambling harms will be more consistently funded, so we’re likely to see better outcomes for players who seek help.
For other players, there likely won’t be much impact. However, it’s possible that some operators may try to pass on the cost of the levy to their players. It’s a tiny percentage, but there’s a chance that it might see some players looking for a better experience at other sites, potentially unlicensed operators who won’t be paying the levy
For the industry: For the casinos that were making voluntary donations, not a lot will change. However, for those that were contributing £1 per year, or not contributing at all, this will represent a dent in their profits. Smaller operators are likely to face the bigger strain, potentially leading to some having to make cutbacks.
Public perception: A mandatory levy shows the commitment of the gambling industry to reducing harm. That can only be a good thing for for how the industry is perceived. It might not be enough to completely placate anti-gambling rhetoric, but it’s certainly a start.
Pros and cons
As with any decision, there are pros and cons. For me, the levy has far more pros than cons. Any meaningful steps towards reducing gambling harms should be celebrated – and the levy could be a massive one! But still, there are some potentially negative impacts worth considering.
Pros:
- Sustainable funding for treatment prevention and research.
- Should have a positive impact and actually reduce gambling related harms.
- Ensures everybody contributes fairly, removing ridiculous £1 contributions.
- Could enhance trust in the gambling industry.
Cons:
- The financial impact on smaller operators could impact their viability.
- Risk of cost being passed onto players.
- Some players might be tempted away by offshore or unlicensed alternatives, particularly if regulated operators raise prices to cover costs.
- Disagreements on funds distribution.
Summary
The levy isn’t perfect, but it’s a positive step in the right direction. Charging operators a set percentage ensures reliable, and largely predictable, funding for organisations that do incredible work. With a more reliable source of income, these organisations can perform even more strongly, taking on new initiatives that could help players who need it most.
Of course there’s room for improvement, The National Lottery is currently exempt due to its contributions to good causes. But, it’s hard to ignore that this exemption sets it apart from every other operator. In a system built on fairness, the Lottery’s 0% contribution might not stay unchallenged forever.
Aside from this, it’s a brilliant start. Only time will tell how effective this levy will be, but for now, guaranteed funding for hard-working organisations can only be viewed as a positive.