New study claims new UK regulations won’t affect the economy by as much as previously projected
Research claims ‘industry fears about a massive hit to economic activity are overstated’
Proposals for new gambling regulations, which are projected to reduce the income of the gambling industry, are unlikely to substantially affect UK economy in a negative way, according to research conducted jointly by researchers at the National Institute of Economic and Social Research and the University of Glasgow.
The 2023 White Paper ‘High Stakes: Gambling Reform for the Digital Age’ proposed a series of new gambling regulations, some of which are now being implemented. These regulatory measures were projected to reduce Gross Gambling Yield (GGY)—the amount of money retained by the gambling industry after paying out winnings—by approximately £812m. The research claims that the bulk of this reduction is recycled back into the economy, and only about £134m (about 16 per cent of the total reduction) is expected to translate into a net negative economic impact on the UK economy. That’s because most consumers will likely redirect any reduced spending on gambling to other areas of day-to-day spending or savings, thus mitigating the impact.
The findings suggest that people who reduce gambling spending are likely to redirect money toward essentials—food, daily shopping, and household needs—as well as savings or debt repayment rather than additional leisure spending.
This is the first research study to assess the likely impact of regulatory change by working with people who gamble to fully understand how their behaviours might change. We used these insights to model the impact upon the economy overall.
The research claims that the actual net negative impact would more likely be less than £134m. The reason is that according to government predictions, most reductions will come from online gambling, which has lower economic multipliers and therefore lower contribution to the overall economy than land-based operations. In addition, increased savings, which was a common preference among the people within the study, typically generate future investment and economic activity, which are not reflected in the study. For these reasons, the estimates are likely to be at the lower end of the spectrum
The work also considers that some spend may be transferred to the unlicensed gambling market. The findings claim that only eight per cent of people who regularly gamble would consistently think about moving their spend to unlicensed gambling websites because of changes in the regulated market. Of these people, around one-third (32 per cent) already use unlicensed gambling sites. The study, based on survey data from people who gamble, suggests that most people who regularly gamble are unlikely to turn to the unlicensed gambling market when faced with greater regulatory controls. Nevertheless, some would and taking this into account suggests the net negative impact would likely increase from £134m to around £189m, or 23 per cent of the total reduction.
Either way, the impact of regulatory changes on the overall economy will be substantially offset by consumers redirecting their spend to other areas of the economy that contribute more to growth.
Katherine Simpson, lead author from the University of Glasgow said: “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.”
Adrian Pabst, Deputy Director of the National Institute of Economic and Social Research said: “There is no necessary trade-off between enhanced regulation and greater economic growth. 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.”
