The gambling industry in the UK is one that is very controversial. The recent highlights to things like problem gambling and the issues with bookmakers being transparent about things like how welcome offers are promoted have left a bitter taste in the mouth of many. Those looking from outside in often associate gambling with “underground” circles and dodgy dealings. But the truth is that it couldn’t be further from the truth these days.
Yes, problem gambling exists, and this is one of a number of issues that need addressing, but bookmakers have been very forthcoming with helping governing bodies like the UK Gambling Commission to overcome this and, in fact, the industry is one of the most regulated in the country.
Gambling also plays a big role in the UK to its economy. As much as the government likes to distance itself from it, the fact is that until 2011 the government owned one of the biggest betting platforms in the country in the form of the Tote. They also take a huge amount of taxes from within the industry which they massively rely on for funding within other sectors in the UK. Even though it’s an industry that is easily targeted by people outside of it, the fact is that the gambling industry contributes huge sums of money to the UK economy.
Benefits to the Local Economy
One of the biggest influences that they have is that of the creation of jobs within the country. The Gambling Commission reported in 2018 that there were 106,670 direct employees for gambling companies situated and based in the UK.
Employment
Of the 32 million people that are currently in employment within the UK, this makes up for 0.33% of the total employment population. This may seem like a small number, but it’s actually quite significant when you compare it other industries.
One of the more interesting correlations was compared to the whole agriculture, forestry and fishing industry. These are three sectors that are huge in the UK and we export (and import) a lot of produce from all of these. In 2019, it was reported that the number of people in this industry was around 333,000. This is 3 times bigger than the gambling industry, but given the size of all three and their importance within the UK, you would have assumed that these were a lot larger.
Since the merger in 2016 between Ladbrokes and Coral, the company now have the biggest workforce in the UK, with over 30,000 people working for them. Next in the list is William Hill with 16,000 and Paddy Power with 8,000.
These companies all have something in common in that they all still run high street betting shops. This means that they need more employees to run these alongside their online business. If you compare that to a bookmaker like bet365 who are online-only with just 3,500 employees, it highlights where the majority of the workforce are utilised.
This also highlights the need to the workforce on the high street as well, given that this is where the majority of bookies are based. Given how poor the high streets are performing these and the rate of closure with other shops and major brands, the betting industry still allows a route into these spaces for workers within the UK.
Tax Payments
The industry generates a huge amount of tax for the economy. As it stands, it was reported in May 2019 by the UK Gambling Commission that the total Gross Gambling Yield for 2017-2018 was £14.5 bn, which was actually a slight decrease on the previous period.
There are actually a number of different gaming duties that are related to the industry, which include things like lottery, machine games, general betting, remote gaming, bingo and pool betting. Each has slightly different amounts of money that are taken from the industry and then put back into the UK economy.
Remote Gambling Duty
In 2018, it was announced that the increase in remote gambling duty would come into effect from 2019 onwards. This meant an increase of 6% from 15% to 21% in the tax that needed to be paid on all remote sector bets (online, mobile, etc.). This increase came about as a direct response to the limitations of stakes that were applied to FOBTs (Fixed Odds Betting Terminals) to help with problem gambling and offset the money lost by the government as a result.
In the year 2017/18 it was reported that £2.86 bn was paid to the UK economy from the betting alone. These sums were based on the old 15% duty, with these numbers set to rise as the increase to 21% comes into action offering an even greater impact on the economy.
The current trend is set for the industry to surpass the £3bn in tax paid in the next few years, which is pretty staggering. Given that the overall tax taken in the UK is around £800 bn, this means that 0.375% of the entire tax bill in the UK comes from gambling industry. This may sound like a really small amount, but when you think of the hundreds of industries there are the number of sectors within each of those, it’s actually a highly significant number and one of the main reasons why the government moved to increase the duty charged on remote gambling to cover losses from FOBTs.
Tax Paid by the Gambling Industry
Below is a chart of the tax taken for each year since 2000.
Contribution to Sport
Another way that the gambling industry actually has a positive impact is via their financial contributions to sport. These can often be quite significant, and some are vital to keep those sports running.
Horse Racing Betting Levy
One of the most common and largest is that of the horse racing betting levy. The levy has been designed to allow money taken by the bookmakers and to pump it back into the sport.
The rules were recently changed in 2017 to allow for greater investment and in turn a 10% levy was slapped on to any gains that are directly taken from horse racing with all UK bookmakers. This number then equates to around £90 million per year in funding for horse racing, which is vital to keep the sport running.
Money Reinvested
The money is invested in a number of ways, but the main one is the prize money that is on offer. The thinking here is that the money that is won by the horses is then reinvested into things like facilities, healthcare and training for the horses, rather than just handing out grants to certain stables.
Donations to Problem Gambling
On top of that bookmakers have agreed to also contribute donations to things like problem gambling. In 2007, they signed an agreement with the government to give 0.1% to problem gambling charities, a figure that would amass around £13million per year. Most of the companies actually donate more than this amount, although exact figures aren’t published to determine who is paying what.
One off payments are not uncommon as well, with the likes of Ladbrokes Coral, William Hill, Betfair Paddy Power, Sky Bet and Bet365 all stating they were willing to donate over £100 million over the next 5 years to help with problem gambling.
Sponsorship
We want to finally touch upon sponsorship deals and the money that they invest via sponsorship that keeps a lot of sports in action. We’ve mentioned about horse racing previously, and whilst this is a mandatory levy that must be paid by all bookmakers making over £500,000 a year from the sport, there are many voluntary sponsorship contributions that are made, as well.
Football
Football is the sport that has probably seen the biggest influx when it comes to sponsorship. It was Fulham who were the first to adopt a bookmaker as their main sponsor with Betfair working with the London-based club back in 2002/03 season.
Since then, pretty much all Premier League clubs and most Football League clubs have at least a bookmaker as a “betting partner” if not as their main sponsor. 9 of the 20 current Premier League teams have bookmakers as their main sponsor and deals can range from around £10 million per year to £1.5 million per year.
The big money in shirt sponsors come from outside of betting though, with the likes of car manufacturer Chevrolet paying upwards of £50 million per year to sponsor Manchester United and Etihad Airline paying £35 million per year as sponsors of Premier League champions Manchester City.
Greyhound Racing
Greyhound racing is another that has progressed from bookmaker sponsorship. In fact, bookmakers have been so keen to see the sport remain and succeed in what are currently pretty dire times for the sport, that they have taken it upon themselves to even purchase tracks and stadiums to allow punters to still enjoy the racing there before they were closed down.
Money that is invested comes both in the form of upgrades to the stadiums and facilities, but also for the prize money that is on offer. It if wasn’t for the betting industry and their sponsorships, it’s likely that dog racing would be a sport that was very much on the edge of being extinct given the steep demise of the sport.