Appraising the Economic Impact of Online Gambling in the UK

Posted by Harry Kane on Friday, May 27, 2022

Online gambling underpins a huge market in the UK, along with other developed markets across the world. Between April 2021 and March 2022, remote betting, bingo and iGaming generated approximately £6.44 billion in the UK, with this number continuing to increase incrementally year-on-year.

As you can imagine, a market of this size and value also drives significant levels of economic growth and expansion, both from the perspective of tax contributions to the Treasury and job creation throughout the UK. This has created a legislative issue for the government, who must balance the moral and societal challenges posed by online gambling against the industry’s obvious economic value.

In this article, we’re going to appraise the economic value of iGaming and remote betting in the UK, while reviewing precisely how much casino brands and sportsbooks generate in tax revenues every single year. Let’s get into it!

The Rise of iGaming in the UK

According to the some of the more recent statistics, some 48% of UK bettors gambled at least once a week through 2021. While this includes the number of people who regularly wager on the National Lottery in the UK, it also reflects the rising popularity and accessibility of iGaming and remote betting channels on these shores.

There’s no doubt that online gambling is the key driver of the wider industry’s growth in Britain, with non-remote betting having decreased by 57.1% between April 2020 and March 2021. While this trend was exacerbated by the coronavirus pandemic (which saw offline establishments temporarily close their doors and increased demand for online gambling), there are several other factors that have contributed to the relative decline of offline wagering.

These include the FOBT cap imposed by the government, which saw the maximum wager threshold for fixed-odds betting terminals slashed from £100 to just £2 in April 2019. This saw bookmaker revenues decline by around 56% overall, while market leading brands like William Hill and Ladbrokes were forced into numerous store closures and staff redundancies.

Another contributing factor is the changing iGaming demographics, as more people across a broader range of ages have started to wager online. To this end, it was punters aged between 45 and 54 who gambled most prolifically online between 2020 and 2021, with 32.8% of this demographic engaging in virtual casino or remote sportsbook gameplay during this period.

Additionally, 28.8% of 35–44-year-olds bet online between 2020 and 2021, while the 55-64 demographic boasted the next highest rate of participation at 28%. This shows that older gamblers are now transitioning online, which is crucial given that such demographics will have previously wagered at land-based bookmakers and casinos across the length and breadth of the UK.

The Economic Impact of Online Gambling and Betting

As we can see, a growing number of people across a broad selection of age ranges are now gambling online, through both iGaming and remote betting channels. This, along with a dramatic rise in mobile gambling and increased Internet penetration rates has transformed iGaming into a highly lucrative marketplace, and one that makes increasingly impactful economic contributions each year.

Currently, the UK is thought to be home to the world’s biggest legal and regulated iGaming marketplace, while the industry is becoming an increasingly important contributor to the region’s gross domestic product (GDP). This can be seen through various facets such as job creation, especially within industries such as customer service, marketing, risk analysis, programmers and UI experts.

Overall, more than 100,000 people were employed in the remote gambling industry in 2019, while this figure has continued to rise incrementally since. Software design and development is a particularly fast-growing role within the UK’s iGaming space, as demand continues to increase and players crave a more diverse and rewarding online experience.

Online gambling has evolved to become an increasingly dominant force in the UK’s wider gambling industry, accounting for 38.8% of the region’s total revenue in 2018. This figure has since inched beyond 40%, as verticals such as iGaming and remote betting continue to replace offline alternatives. Interestingly, this has also triggered an adjustment in terms of the tax levies applied to iGaming brands, as the government has looked to leverage the market to its own economic advantage.

More specifically, the Remote Gaming Duty (RGD) paid by online betting brands was previously fixed at 15%. However, after the government imposed its controversial FOBT cap and reduced the tax revenue generated through land-based gambling hubs, it increased the RGD levy by six percentage points to a whopping 21% in 2019.

Of course, this controversial move has raised significant questions about how the government can clamp down on iGaming while simultaneously leveraging it to their economic advantage. From an economic perspective, however, it has increased the tax contribution made through iGaming, with this subsequently being invested into healthcare, education, infrastructure spending and strategic GDP growth.

The Last Word – Feeding Consumerism and the Future of iGaming

A vibrant iGaming market undoubtedly feeds consumerism and growth, across an array of different channels and niches too. For example, both players and betting brands can profit from increased demand and growth in the industry, typically in the form of incrementally higher jackpots and payouts and higher rates of participation over time.

Similarly, the rise of online gambling creates an increased and sustainable demand for advanced payment technology and cybersecurity services. It also generates new and exciting

opportunities for software developers, especially as technologies like augmented and virtual reality continue to drive more immersive and authentic gambling experiences.

Ultimately, there’s no real sign that this state of affairs will change any time soon, especially as iGaming and remote betting continue to grow and benefit from rising demand. However, the recent iGaming review in the UK has seen a number of proposals made that could strangle growth in the near and medium-term, including the introduction of a £2 betting cap for online slots and a blanket ban of online advertising.

This will be an interesting space to watch in the future, especially as the government looks to strike the balance between regulating online gambling and managing its societal harms and creating a viable source of tax revenue. However, nobody can deny the wider economic contribution made by online gambling on these shores, especially in terms of job creation and total tax levies.