The Government has announced that it will introduce a statutory levy on gambling operators that will take effect in April 2025. This had been anticipated since the April 2023 publication of the White Paper, which proposed a number of reforms to the sector. The proposals included, in the Government’s words, a “statutory levy paid by operators in scope directly to the Gambling Commission (“Commission”) to fund research, education and treatment of gambling harms”. As reported in our previous blog post, the Government ran an eight-week consultation on the proposed levy between October 2023 and December 2023.

The levy

The Government will introduce the levy using statutory powers that have existed since the enactment of the Gambling Act 2005 (the “Act”) but had remained unused until now. The Government has stated that the levy will be “charged to all licensed gambling activity” at levels that will vary “depending on the sector and nature of the gambling activity”, with the purpose being “to ensure impacts are proportionate”.

It is anticipated that the levy will come into force in April 2025 via secondary legislation and will replace the current system of voluntary contributions made by operators (operators are required to continue these contributions in line with the conditions of their licences until April 2025). It will be applied to all Commission operating licence holders and payable on 1 October each year. Notably, the Government has made it clear that the levy will be reviewed within five years, with the first review anticipated by 2030. The reviews will assess the efficacy of the ratios in which the funds are allocated to different areas, as well as “whether the principles guiding this spend are effective”.

The Government estimates that the levy could raise as much as £100 million annually.

Rates

All Commission operating licence holders will be required to pay the levy, which is not a departure from the current system under SRCP 3.1.1, which applies to ‘All licences’ and requires licensees to make an annual financial contribution.

For the majority of operators, the rate of the levy will be charged as a percentage of each operator’s Gross Gambling Yield (GGY) for the previous year. Online operating licensees (with certain exceptions, including society lotteries with remote licences), will pay 1.1%. Software licence holders will also pay 1.1%. The rate for land-based casinos and betting shops will be 0.5%, while on-course bookmakers and land-based bingo licensees will pay 0.2%. Pool betting licensees and machine technical licensees will be required to pay 0.1%.

Collection and distribution

The Commission, pursuant to the powers granted to it under the Act, will collect the levy from operators.

However, as far as distribution of the levy is concerned, the Commission will not have carte blanche in terms of its approach. The Government’s announcement states that the levy will be administered “according to strategic direction set by the UK government”, which shall include input from a “central government Levy Board”. The Levy Board is to include the Department of Health and Social Care and the Department for Science Innovation and Technology. In addition, the Government will draw up an “informal Advisory Group” made up of “experts across disciplines” to support decision-making on how the levy is spent. As such, the levy is far from being a matter solely within the purview of the UK’s specialist gambling regulator.

The levy is to be distributed in predetermined proportions across three areas: research, prevention and treatment and:

• 20% of all funds raised will be used for research purposes. This will include allocation of funds to UK Research and Innovation (UKRI), which will be used to establish a Research Programme on Gambling, and to fund research by the Gambling Commission in line with its licensing objectives.
• 30% of the levy will be directed towards funding for the development of “a comprehensive approach” to “prevention” across Great Britain. The Government announcement is less clear in in this regard, and indicates it requires “further consideration of the evidence” before deciding what such an approach should entail.
• 50% of funds raised under the levy will be allocated towards the NHS “to commission treatment and support services, including in the third sector”.

Commentary

The introduction of the levy is certainly one of the more emotive outputs of the White Paper, and the intensity of such emotion is informed and determined by  various stakeholders and their stance on the role that gambling can play within today’s leisure environment.

On the one hand, a number of commentators from the public health arena, with significant backing from certain elements of the media, have lauded this move as a hugely welcome step in addressing the negative societal impacts of gambling. The phrase “the polluter pays” has been doing a lot of heavy lifting for such commentators. One only needs to read certain media output in the last few days (with the focus on the lived experience of certain individuals with gambling disorder) to explain why many in public health are celebrating the extraction of at least £100 million from the gambling industry, each year, to fund prevention, research and treatment. If there ever were a headline-grabbing initiative, then this is clearly it.

On the other hand, understandably, the industry’s view of the levy is somewhat different – particularly at a time when the White Paper’s output continues to be implemented.  It is always worth remembering that the review of the Act and gambling regulation  was presented as seeking to find a balance between consumer protection and consumer freedom, with the Government also recognising that gambling employs lots of people, pays lots of tax and, ultimately, is enjoyed by the vast majority of its participants without any evidence of detrimental consequence.

Whilst, of course, the industry can lament about the commercial impact of the levy, it is here to stay. At least, for a while. One area of significant attention should be how the levy operates in practice.  The Government has said that it is “important that transparent commissioning and governance arrangements are in place to ensure necessary funding is being effectively directed where it is needed most and that we have the data and evidence needed to monitor our progress in reducing gambling harm”.

There is no one in the industry that would disagree with the objective of reducing gambling harm.  However, what will be absolutely critical is how these governance arrangements work in practice.  The Government has gone to some length to explain why a levy that raises nigh on £100 million each year is needed to meet the objective of reducing gambling harm.  Assuming that it does do that, working in parallel with the organisational changes being made within the industry as a result of the broader White Paper initiatives, one would not just hope but expect that gambling harm is reduced in the near to medium term and that the burden of the levy on the industry should reduce.

Many of the practitioners who run organisations that will receive levy funding will disagree with this, as they consider gambling as being inherently harmful and deserving to be treated as such. But the Government clearly does not accept that and the balance it sought to achieve, as enshrined within the White Paper, between customer freedom and player protection is representative of that.

We will need to keep an eye on these governance arrangements and how they work over the next few years. The Government really should be put to task here to ensure that there is an evidence-based process in place to “monitor progress in reducing gambling harm”, and that corresponding changes are then made to the levy, either by way of its reduction over time and/or by the way in which it is used.

As we sit here today, it is difficult to envisage a situation where £100 million needs to be extracted from the industry every year in order to pursue an agenda which regulatory change and better data and understanding is likely to operate to achieve in any event.