Cost of gambling to Government is severely underestimated at £1.2 billion per year

Posted on December 20, 2016 by admin
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The Campaign for Fairer Gambling responds to a recent report on problem gambling and the impact it has on the UK economy.

Betting shop

A new report by the Institute of Public Policy Research (IPPR) shows that the annual total cost to the UK economy of pathological problem gambling could be up to £1.2 billion per year. The research which has looked only at the main areas of potential impact, has given us a low-end estimate broken down by:

  • Primary care (mental health) services (£10–£40 million)
  • Secondary mental health services (£30 million–£110 million)
  • Hospital inpatient services (£140 million–£610 million)
  • JSA claimant costs and lost labour tax receipts (£40 million–£160 million)
  • Statutory homelessness applications (£10 million–£60 million)
  • Incarcerations (£40 million–£190 million)

Whilst the IPPR is very well respected and the methodology used is sound, there are reasons why even the £1.2 billion is an underestimation.

The research will have used the Gamble Aware definition of “problem gamblers”, which only includes the most extreme pathological gamblers. They estimate this group to represent up to 1.1% of the population.  However, there is a larger group of people who are classed as “at risk” from gambling, and vulnerable to easy access, high-stakes gambling activities such as FOBTs, who are not accounted for anywhere in this analysis. That is a major omission when according to the last combined Health Survey analysis, this group of gamblers represented up to 4.2% of the population – four times that of the group for which these estimates are based on.

Overseas research suggests that the cost of harm related to the broader problem gambling group is over double that of the pathological only group. So, the IPPR’s £1.2 billion is likely actually to be over £2.4 billion when considering the whole range of problem gamblers.

If that wasn’t enough, the IPPR estimates are only the tip of the iceberg. Being measured solely against Government services as they are, means there are many more hidden costs to individuals, their families, employers and communities, which whilst hard to quantify, add even more to the economic consequences of problem gambling.

Certain forms of gambling are also more detrimental than others. FOBTs have a very negative economic contribution as betting shops often only have one staff member, pay close to minimum wage levels and predominantly  extract rather than redistribute economic activity in communities. Similarly, remote gambling has limited employees per gambler and is often based overseas so can again have a negative economic impact.

The ease of access to FOBTs and the anonymous, automated cash gambling they provide together with NatCen’s conclusions that: “Players overall tend to live in neighbourhoods with higher levels of resident unemployment, multiple deprivation and economic inactivity, and which are more ethnically diverse than the national average” supports the argument that they are causing harm and economic consequences in communities already burdened by disadvantage. IPPR note that pathological problem gambling is more prevalent among those with lower incomes – 1.8%. However, this could be over 7% when including “at risk” problem gamblers.

Between 2007 and 2010, increased FOBT use was primarily driven by young men aged between 16 and 34, where use went from 9% to 14%. The IPPR report notes that the highest rates of problem gambling are among the youngest age groups – 2.1% among 16–24-year-olds and 1.5% among 25–34-year-olds. So not only are FOBTs impacting the most deprived communities, they are impacting the future economic potential of a whole generation of young people in those communities.

The IPPR report was commissioned by the Responsible Gambling Trust (RGT), now rebranded as GambleAware which is funded by gambling operators, who are incentivised to encourage the perception that the cost of gambling is lower than it really is. All RGT commissioned research has focused on pathological gamblers, rather than the larger problem gambling population. This misleading picture is supported by the Responsible Gambling Strategy Board, which is appointed by the Gambling Commission to advise it, which in turn is appointed by DCMS to be its adviser.

The burning question for all these bodies that this research begs is, how does the industry contribution of £10 million for research, education and treatment of problem gambling stack up against a low-end estimate of a £1.2billion cost to the economy?

As the FOBT debate continues, there will be the usual suspects in Parliament arguing economic “fake facts” to try to protect the bookies’ FOBT cash cow. They choose to ignore FOBT related suicides, FOBT related violent incidents in shops and toward staff and the wider harm being caused to gamblers.

The Gambling Review by DCMS must ignore the “fake fact” peddlers, whoever they are.