Polly on Gambling

My, how things do change. A couple of years ago Polly wrote a book in which she denounced the £50 billion gambling industry.

the £9.7bn a year that the Office for National Statistics shows households lose

Somebody\’s obviously had a word, as that is indeed the correct sum to be using: losses, not turnover. Another way of framing that number is (this is a dimly recalled number, apologies) that it\’s somewhere between one and two percent of consumer expenditure.

However, there has never been any sign of popular demand: in national polls 93% saw no need for more casinos. They are opposed by majorities locally, by women even more strongly than men.

So if there\’s no sign of any popular demand then people won\’t build the casinos, will they? No one deliberately sets out to lose money on a new business after all. It may well be true that a majority of the population see no need for more casinos, that they won\’t in fact go to them if built: but in a liberal democracy that\’s no reason to stop those who do wish to go to them. As long as peoples\’ activities do not harm others there is no moral case for us to stop them doing as they wish: it\’s what the very concept of being a liberal means.

The US, on the other hand, has gone the other way, banning online gambling by forbidding credit card companies to pay out to online sites. There are elaborate ways round this, but it stops impulse online gambling by anyone with an ordinary credit card. Why don\’t we do that?

Because it\’s a grossly illiberal restriction upon freedom and liberty perhaps?

The Australian government now draws over 10% of its income from gambling:

No. This is deliberately misleading. "The Australian Government" is the Federal one. That\’s the one that levies corporation tax and income tax, as examples. See here. The Federal Government raises a little over 20% of GDP through taxation: none of it from gambling. The State Governments are the people who tax gambling. Total State tax revenues are a little under 9% of GDP and the average of that 9% which is raised from gambling is the 10% Polly uses. Translating that back into UK figures, some 0.9% of GDP, we get a tax take of £10-£11 billion. A useful chunk of change, certainly, but really rather different from her implied number, 10% of total tax revenue, or £55-£60 billion, isn\’t it?

The UK Treasury gets only £1.4bn from gambling: on household losses of £9.7bn, that sounds as if the industry is escaping its fair UK dues.

It is to snigger. Household losses are of course not the profits of the gambling companies. They are the revenues of them. Out of those revenues they rent their buildings, pay their staff, run the advertising campaigns and so on, plus of course they have profits upon which they pay tax. But for the government to be screwing 14% of total turnover out of an industry is really quite impressive: outside sectors like domestically pumped oil (with the royalties upon it) I\’m not sure that there is any other sector so heavily taxed. Be very interested to know if there is of course.

One thing that might further amuse: those total losses are the total revenues: out of which are also paid such things as the good causes fund from the lottery.

No-one is suggesting banning gambling or casinos, any more than I would ban pornography, or drugs or all manner of things that might do people harm.

Well, you did just suggest banning internet gambling, as in the US.

What is it about gambling that makes Polly so confused?

3 comments on “Polly on Gambling

  1. “What is it about gambling that makes Polly so confused?”

    The usual things, I imagine. Facts. Economics. Logic.

  2. “any other sector that is so heavily taxed”!?

    Tim, any sector that produces VAT-able supplies hands over just under 15% of its turnover as VAT. Sure, the nominal VAT bill is reduced by the input VAT they have paid to their own suppliers, but the total bill, VAT paid to HMRC plus input VAT paid to suppliers is 14.8936% of turnover.

    Next question.

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