Tottenham Report: To levy or not to levy

Tottenham Report: To levy or not to levy

  • Andrew Tottenham — Managing Director, Tottenham & Co
June 2, 2022 2:00 AM
  • Andrew Tottenham — Managing Director, Tottenham & Co

As we get closer to the UK government releasing the White Paper on the reform of Britain’s gambling law, arguments about what should be in the reform are coming to the fore. One of the big issues being openly debated is: Should there be a levy to fund research? Or should it be entirely voluntary? 

Jordan Lea, Founder and CEO of Dealmeout, is quoted in an article in SBC News accusing Gambleaware, the organisation responsible for commissioning research into, education about, and treatment of problem gambling (RET) according to the strategy developed by the RGSB, of sitting on money donated by gambling companies, rather than giving it to some of the smaller organisations that provide services for gambling addiction. 

He believes a compulsory levy is a bad idea; it would cut off any funding routes for these smaller, and perhaps newer, organisations that don’t receive funds from Gambleaware and are forced to go from company to company requesting funding. The levy would suck up any money that gambling companies might be prepared to donate directly. 

I have some sympathy with Lea’s position. Looking back, I remember talking to Lee Willows, the founder of YGAM when it was a charity in its infancy. YGAM is an organisation that informs and educates young people about gambling and its potential harms. Lee couldn’t receive funding from Gambleaware and was struggling to find a consistent stream of money, an absolute requirement if the organisation were to survive and plan for the future. 

In a curt response to Jordan Lea’s comments, Gambleaware CEO Zoë Osmond published an open letter pointing to all the good work that Gambleaware undertook, how much money had been and was to be distributed, and what had been achieved to date.  

Gambleaware is in favour of a levy. They believe it would guarantee a level of funding for RET, making sure that all companies donate to RET; many companies dodge the implicit obligation to donate RET money. A reliable and constant funding stream would allow Gambleaware to enter long-term agreements with treatment providers, researchers, etc. 

There is no guarantee that Gambleaware will survive the recommendations of the White Paper. A levy collected centrally could very well lead to a government department becoming the distributor of that money. We have already seen the Gambling Commission absorb some of the responsibilities for developing a strategy for minimising gambling harms; these were provided by an independent body, albeit in a clumsy and duplicative structure. 

Many gambling companies are in favour of a levy. It allows them to know how much it will cost and that all companies are paying their fair share. It may also eliminate, or at least diminish, the endless public shaming of the industry. When some companies don’t contribute what they should, those dependent on funding loudly claim the industry is not paying its way. 

However, I believe that argument misses the point and takes for granted that the gambling industry should pay a special tax to directly fund what is now described as a “public-health” issue. I do not see liquor companies being obliged to fund RET for alcohol addiction, or drug companies for funding RET for opioid addiction, or cigarette companies for funding RET for tobacco addiction. 

Gambling companies already pay more than £3 billion each year to the UK Treasury. If gambling harms are a public-health matter, shouldn’t it be the responsibility of the government to determine how much of the public purse should fund the health services, and health professionals to determine how much of their budget should be devoted to RET for gambling addiction?  

Unfortunately, this argument has been lost even before it began. I do not see RET ever being funded directly from the public purse. It would be a brave Minister who announced the reorganising of financing RET, with money being disbursed from the public purse and not collected and spent directly. 

Devoting the proceeds of a specific tax to a particular cause, a hypothecated tax, is not necessarily a good idea. Once the tax is in place, politicians think that the problem is solved and they do not need to revisit the matter. Some states in the U.S. devote the tax revenue from lotteries to the education budget, for example. As lottery revenues and, thus, the tax proceeds decline, the money required for education does not reduce in kind; education budgets are a function of the number of children going through schools and not the popularity of the state lottery. The result is that state schools feel the pinch, but little is done to solve the matter.  

It could be argued that gambling revenues are more stable and therefore the income from a levy would be stable too. That could be true. But are the needs for RET going to be stable? Will they increase or decrease over time? Knowing how this works, they will certainly increase over time, but that doesn’t mean there is a need for more money, just that funding sources attract people who will want to spend it. 

I think where we need to start goes back to developing a long-term strategy for RET. What will be required? How much will it cost? Then the question is, how do you best secure the money to pay for it? Until this work is done, there will always be arguments about how the gambling industry is not paying for the harms it is causing to the detriment of all involved.