New study suggests UK gambling reforms will have minimal economic impact

(AsiaGameHub) –   The research challenges industry claims of severe economic fallout from the British Gambling Act review.

UK.- The 2023 gambling white paper, High Stakes: Gambling Reform for the Digital Age, proposed a series of enhanced regulatory measures for gambling, including stake limits for online slots and the new mandatory gambling levy imposed a year ago. The document projected a cumulative impact on gross gambling yield to the tune of around £812m.

A new study conducted by the National Institute of Economic and Social Research (NIESR) in collaboration with the University of Glasgow, examined the potential wider consequences of this impact to estimate the net economic impact of the reduced gambling expenditure. The team used surveys, behavioural experiments and input-output analysis.

They conclude that while the gambling industry may face reduced revenue, the broader economy is likely to absorb the impact through redirected consumer spending, challenging claims of severe economic fallout.

Gamblers’ redirection of spending

A probability survey of 1,320 regular gamblers informed the design of a discrete choice experiment, in which 804 participants indicated how they would reallocate a hypothetical £50 monthly budget no longer spent on gambling. The results were then applied to UK input-output tables from 2022 to assess sectoral impacts.

The findings showed that only around £134m, about 16 per cent of the projected gross reduction, would translate into a net loss in UK output once consumer spending shifts were taken into account. Most participants said they would redirect spending toward essentials such as food, drink, household items, and debt repayment.

Lead author Katherine Simpson of the University of Glasgow explained: “We looked at how people who gamble say they would adjust their spending if these reforms were introduced, and then we modelled what that means for the wider economy. What we find is that most of the money doesn’t disappear, it’s redirected elsewhere, so the overall economic impact is relatively limited.”

The study also explored behavioural patterns. While the experimental sample skewed younger and included a higher proportion of problem gamblers, spending reallocations were consistent across different levels of gambling severity.

Concerns about unlicensed gambling were also addressed. Although 73 per cent of online gamblers said they would not divert spending to unregulated operators, 8.5 per cent consistently did so in the experiment. The researchers noted that if 8 per cent of spending shifted to unlicensed gambling, net losses would rise to £189m, while a 27 per cent diversion would push losses to £317m.

The report highlighted that online gambling has weaker domestic economic multipliers due to offshore supply chains. A modest reduction in the assumed multiplier could even eliminate the net loss entirely, potentially resulting in a small net gain, researchers said.

“no necessary trade-off”

Adrian Pabst, deputy director of NIESR, argued that the findings show gambling reforms should not be seen as a threat to economic growth.

“There is no necessary trade-off between enhanced regulation and greater economic growth,” he claimed. “Our work shows that the new gambling regulations will have a very small negative impact on the UK economy and that there are potential benefits in terms of people who gamble regularly saving more or redirecting their consumption to other sectors. Industry fears about a massive hit to economic activity are overstated and also ignore the wider social benefits of the regulatory changes.”