White Paper to Cost UK Economy £189 Million Per Year, Study Finds

A macroeconomic study has found measures from the government’s 2023 Gambling White Paper will have a net negative impact of approximately £189 million per year on the wider UK economy, in part driven by greater numbers betting on unlicensed websites.

The Gambling White Paper was one of the most significant publications in the history of gambling in the UK, setting out more than 60 proposals to update the country’s gambling laws.

Among the terms recommended were affordability checks, in an attempt to protect players spending a certain amount within a certain timeframe, improved identification checks, a statutory levy, and a cap on the maximum stakes on online slots at £5 for older adults and £2 for younger adults.

Majority will be retained

The UK government had forecast an annual economic impact of between £329 million and £812 million as a result of the enhanced regulatory measures. However, a study from the National Institute of Economic and Social Research (NIESR) shows the majority of this will be retained within the wider economy, with £134 million (16% of the total) expected to translate into a net negative impact on the UK’s gross domestic product.

NIESR said one of the reasons for this is that most of the regulatory changes affect online gambling, which has lower economic multipliers than land-based gambling. However, the study also found about 8% of people who regularly gamble reported they would consistently consider visiting unlicensed gambling websites.

Close to one third of this group (32.7%) already gamble on unlicensed websites. When this move to the black market is taken into account, the estimated net negative impact increases to £189 million per year, or 23% of the total reduction in gross gaming yield.

The findings suggested people who reduce their gambling spend are likely to redirect that spend to essentials such as food, daily shopping and household needs.

How the info was compiled?

The data was put together with three methodologies. In the first stage, 1,320 regular gamblers were surveyed, to measure engagement with unlicensed gambling and obtain information on hypothetical redistribution of spending.

The second stage was a bespoke online panel survey, hosted by SurveyEngine, where UK adults who gamble regularly on games other than lotteries and scratchcards were surveyed. The final stage was macro-economic modelling, quantifying individual preferences for alternative spending categories when gambling expenditure is reduced.

Black market messaging

The data about the black market in part supports the messaging often pushed by industry trade body the Betting and Gaming Council (BGC). In April, the BGC published the results of a study from YouGov, commissioned by the BGC, showing close to two thirds of bettors would be unwilling to hand over personal documents to operators.

BGC CEO Grainne Hurst said at the time:

“These proposals will push customers away from the regulated sector and towards the harmful, illegal black market, undermining the very protections these checks are supposed to deliver. The overwhelming majority of customers bet safely and within their means.”

Hurst has also previously referenced analysis from Frontier Economics, which shows up to 1.5 million people a year in Great Britain are already gambling on unlicensed sites, staking up to £4.3 billion a year on the black market; this research was commissioned by the BGC.

NIESR said that while unlicensed market leakage requires monitoring, it believes the evidence shows it will be a minority phenomenon.