Labour should atone for its gambling sins

Times

5 days ago

It was an indelible stain on New Labour: the beaming culture minister Tessa Jowell placing chips on a roulette table as she announced that the government's solution to urban decay was 40 supercasinos, one in each of our most blighted cities. Liberalising gambling wouldn't just bring investment, jobs and tax revenue, it was fun! Modern, grown-up, free market, vice-is-nice fun — along with newly licensed 24-hour pubs and sexy high-street lap dancing clubs.
Those concerned about organised crime, gambling addiction, families in debt or the sheer immorality of rapacious US casino cartels extracting hard-earned wages from the poor of Leeds or Great Yarmouth were, according to the late Jowell, anti-American 'snobs', queasy about Vegas gaudiness, po-faced Puritans. A supercasino, she argued, was no worse for a neighbourhood than a multiplex or a bowling alley.
How the roulette wheel spins. Listening to Gordon Brown explain his call to increase taxes on gambling to raise the £3.2 billion required to abolish the two-child benefit cap felt like an atonement, or maybe historical revenge. He wants the filthiest money in all capitalism to be repurposed for the purest ends: removing children from poverty.
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The Blairites didn't consult Brown, then chancellor, on their supercasino wheeze, knowing this austere son of the manse would be appalled. Indeed, he sided with the churches and the anti-addiction lobby that fought the number down from 40 to eight and finally just one, mooted for Manchester. Then as soon as Brown became PM, he killed off even that and demoted Jowell.
Even so, the 2005 Gambling Act's liberalising force brought £100-a-pop slot machines to every bookies shop, incessant TV betting ads and soaring rates of problem gambling. It also enabled a gazillion supercasinos — it's just that they're all online.
It is these that Brown wishes to target hardest by increasing the tax rate paid on 'remote gaming' from 21 per cent to 50 per cent. He and the IPPR think tank, which authored a report, point out that other jurisdictions already impose higher levies: 40 per cent in Austria, 50 per cent in Pennsylvania, 57 per cent in Delaware.
Moreover other UK 'sin' taxes on products generating health or social problems are far higher: 80 per cent on tobacco, 70 per cent on Scotch. Problem gambling leads to harms estimated to cost society £7.2 billion — family breakdown, debt, catastrophic mental health problems, suicide — yet betting is even exempt from VAT.
Gambling companies prey upon the lonely, bored and desperate, luring solitary people on phones or laptops into squandering savings, Christmas funds or benefits. An online casino does not even involve small talk with a croupier, an online slot machine is just a bunch of pixels and pings.
The IPPR proposals are less hard on real-world gambling, which has some social dimension, and will not impose further levies on horse racing, where bets are already taxed higher than on sports like football.
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Online casino gamblers are, unsurprisingly, six times more likely to become addicts. The top 5 per cent of gamblers generate 86 per cent of profits, and gaming companies allocate them VIP managers, who befriend and groom them into spending more, offering birthday treats or free bets. Lately, as the market for male gamblers has grown saturated, they've targeted women with games like Double Bubble, which use images of soap stars, pastel colours and 'feminised' graphics.
Rachel Reeves says she was already reviewing taxes on the online gambling industry before Brown's intervention. Who can blame her, faced with a £40 billion deficit and a furious electorate? A workforce hit by inflation and stagnant wages will not tolerate higher income tax due to the government's own failure to cut a bloated welfare bill and millions spent on migrant hotels. But online gambling companies, almost everyone can agree, are parasites feeding on the vulnerable and sad. Why not tax them to hell?
The risk is in killing off a golden goose when so many others have flown abroad. We can be revolted by the amoral antics of the porn star Bonnie Blue et al on OnlyFans but note that this highly successful British start-up pays more corporation tax than Starbucks, eBay and Apple combined.
Likewise the Bet365 corporation is among Britain's biggest taxpayers, putting an estimated £376 million into the Treasury, while its chief executive Denise Coates is among the country's highest individual tax payers.
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The IPPR reckons that since gambling duty is charged on a firm's surplus after paying out winnings, companies will just make up for higher taxes by worsening the odds for punters. But at what point will they feel cheated and look elsewhere? Others fear companies will maintain their profits with even more aggressive marketing, so those paying to alleviate child poverty could well be those impoverishing their own children with every bet.
Besides, should £3.2 billion, small change compared to the deficit, be used to lift the two-child cap, which half of Labour voters and six in ten voters want to keep? The prevailing tough-hearted argument is that struggling working parents with one or two children should not be expected to bail out those who choose to have large families they cannot support themselves.
Rather than throwing its few precious gambling chips into the bottomless benefit budget, the government should feed them into Sure Start-style early years interventions or childcare to help parents back into work.
Before her death in 2018, Jowell admitted the Gambling Act was among her greatest regrets. Its legacy is evident in the betting logos on every football strip, the young men seduced by free £10 wagers to blow their student loans, in longer queues for food banks. It was a law passed by thoughtless Cavaliers but we live now in Roundhead times.