In this week’s budget George Osborne announced that the Government would increase taxes on Fixed Odds Betting Terminals from 20% to 25%. This may seem on the face of it as if the Government is taking action against what has been described as ‘the crack cocaine of gambling’. However a reliance on treasury revenue from such addictive gambling machines risks creating a perverse incentive.
The Government is putting the treasury in a position where the nation’s finances are balanced – in part – on the backs of problem gamblers. 25% of £1.6bn profits could be quite a hard habit for the Government to break, where the incentive to reduce the use of FOBTs conflicts with the revenue that comes from them and from problem gamblers. The 5% increase in the levy equates to around £80m with initial figures for William Hill – one of the big five - suggesting a further £16m in taxation.
Raising taxation on FOBTs may make them less profitable, less desirable but with a Fixed Odds return guaranteeing profits, and with 75% of that still be retained by bookmakers it is hard to see how this will reduce the numbers of machines in the UK. Action is required to deal with the harm they cause to individuals and communities.
Adrian Parkinson, Consultant for the Campaign for Fairer Gambling, said: “This increase in Gross Profits Tax (GPT) on FOBTs to 25% may well aid the treasury, but does little to deal with the many issues created by these machines as problem gambling research, education and treatment will not see any of this revenue.“
There is a moral question the treasury must answer. The Chancellor made no simultaneous announcement that the money raised would be used to tackle problem gambling. There is only one NHS problem gambling clinic in the UK and despite the new levy it appears that this will remain the case. The money raised from problem gamblers is not being used those help those vulnerable people but instead be consumed into the treasury budget.
In fact “We may also see a rise in the aggressive marketing of these products from the bookmakers, who will now be desperately trying to attract even more customers. This increase in tax will not be passed on to the FOBT gambler, so is unlikely to act as a deterrent in any way” according to Adrian Parkinson, Consultant for the Campaign for Fairer Gambling