Should we pay more tax on gambling wins...?
Should online gambling gains be taxed more to pay for social services giving the considerable social harm gambling addiction inflicts on us...?
The policy background to this is the 2005 Gambling Act, introduced by Gordon Brown's New Labour, which opened the floodgates to an expanding online gambling sector.
Regulation at the time was written to permit expansion while providing consumer safeguards. However, the acceleration of remote gambling firms has outstripped such objectives to build massive profits alongside astronomical social damages.
The UK Gambling Commission, in 2024, reported that online gambling, casinos, and slots accounted for a substantial 40% of the £15.1 billion industry turnover, whie the social costs of gambling dependency according to research from Public Health England is estimated at £1.27 billion per year in health, welfare, and criminal justice impacts, 2021 figures.
The question is whether the gambling companies' profits should be taxed more to offset these external expenditures.
Taxing Vice or Killing Growth?
Gambling taxation regimes differ hugely: Delaware charges a 57% tax rate on online gambling, while Pennsylvania doesn't have one.
UK taxes are comparatively low, at around 21% of gross gaming yield for online gambling (GOV.UK, 2024) which puts gambling gains in line with income and capital gains tax.
However other 'sin taxes' in the UK are huge: tobacco (80%) or alcohol (70%) which is way over that 20%....
To increase gambling taxes or not...?
Labour Chancellor Rachel Reeves is anxious not to put too many demands on the industry.
And excessive taxation does threaten to drive gambling business abroad, where tax and regulation are more relaxed, and online gambling companies are hardly having to be rooted in place!
A possible middle ground would be earmarked levies: hypothecated levies expended directly on addiction treatment, welfare support, and educational programs. The NHS is presently spending £100 million per year on gambling harm treatment (House of Commons Library, 2023). Linking the income from gambling tax to expenditure on these services directly could render Reeves' policy socially and politically acceptable.
Final thoughts...
The gambling industry is a potentail golden goose for increasing tax revnue, but one which feeds on social ills.
It's not likely to go anywhere, and part of me thinks it's fair enough to give people the opportunity to fuck up big-style.
I do like the idea of offsetting the cost of harms with a targeted levy, but then again that brings into question the problems with measuring those costs, but that is a whole nother story!
All I can say to that is wow.
Regardless my opinion is tax the casino on earnings but winnings won by gamblers should be tax free. How much? No more than any other business within the taxed country - state - province - city.
Doesn't the UK have a lot more problems at the moment other than Gambling?
21% is fair I think, maybe 25% right. But shouldn't be higher x)
In Denmark we don't have a tax on Gambling winnings at all, but the Casinos are taxed differently than other companies if I remember correctly.
As far as the Government of the day is making profit from Tax, I do not think that they really care about the implication of gambling to her citizens
if the gambling wins get taxed, can we request for a tax refund/return when we lose later?
Do gambling taxes change gamblers' behavior? I don't know, but that seems like the kind of thing that economists love to study.
A better way to prevent people from gambling away all their money would be to require them to save the same amount of money per year as they spend on gambling.