British gambling companies allocated an astonishing £2 billion to advertising and marketing in 2022, according to a recent estimate by the media insights group WARC. This figure has reignited discussions about increasing taxes on the sector, as the industry continues to expand its marketing reach through various channels, including print, digital promotions, and affiliate programs.
The substantial spending on advertising far exceeds the £1.2 billion collected by the UK Treasury from online casino companies last year. Industry sources suggest that the actual figure for advertising expenditure might be significantly higher, potentially nearing or surpassing the £2.5 billion raised from the three main duties the gambling sector pays, which encompass taxes on slot machines and sports bets. The growing discrepancy between advertising spending and tax revenue has attracted the attention of policymakers.
Chancellor Rachel Reeves faces mounting pressure from think tanks, Members of Parliament, and former Prime Minister Gordon Brown to consider raising these duties in the upcoming budget. As the government grapples with a challenging financial landscape, the call for increased taxation on gambling companies is intensifying.
The Betting and Gaming Council (BGC), which represents the interests of the gambling industry, has contested WARC’s estimate, asserting that advertising expenditures are closer to £1 billion. This assessment stands in stark contrast to a 2018 report from Regulus Partners, which cited a £1.5 billion figure for industry ad spending.
As discussions continue, the higher estimate of £2 billion has prompted calls for the government to disregard warnings from the industry regarding potential job losses. Meg Hillier, chair of the influential Treasury Select Committee, emphasized that the substantial advertising investment undermines claims made by lobbyists about the financial stability of gambling firms. During a recent committee session, Hillier noted, “The fact that we are told the existence of gambling firms is on a financial knife-edge while they simultaneously plough billions into advertising does not come as a surprise.”
Labour MP Alex Ballinger, a vocal advocate for stricter regulations and taxation of gambling companies, referred to the £2 billion figure as an “astronomic sum.” He suggested that gambling firms should reconsider their advertising strategies rather than resist fair taxation on their substantial profits, especially considering the social harms associated with gambling.
Contrarily, industry analyst Alun Bowden from Eilers & Krejcik Gaming warned that cuts in advertising spend could lead to unintended consequences. He indicated that reduced marketing could benefit illicit operators, who are increasingly gaining traction in the UK gambling market. “Marketing spend is the main way to mitigate costs and would be the first thing to be cut [if taxes rise],” Bowden explained, adding that a decline in advertising could enhance opportunities for unregulated competitors.
According to James McDonald, director of intelligence at WARC, the gambling sector has emerged as a significant player in the advertising market, outpacing traditional industries such as automotive and cosmetics in recent years. He highlighted that while television advertising remains a major focus, social media platforms are also integral to the sector’s marketing strategies.
Activists like Will Prochaska from the Campaign to End Gambling Advertising argued that the industry could afford to reduce its advertising spend while still maintaining employee levels and customer payouts if required to pay increased taxes. Prochaska stated, “One would think that if the sector is asked to pay a bit more tax in the upcoming budget that they could cut back on their ad-spend rather than lay off all their employees.”
In response to the escalating debate, a spokesperson for the BGC reiterated that claims about advertising spending are misleading, asserting that the industry’s advertising expenditure, excluding lotteries, is approximately £1 billion and has been declining in recent years. The spokesperson emphasized that a significant portion of advertising—20% of all broadcast and digital ads—is dedicated to promoting safer gambling practices, a voluntary commitment by the UK industry. They cautioned that further tax increases would likely drive consumers toward the growing black market that fails to implement age checks or safer gambling tools, ultimately undermining the regulated market that contributes significantly to the UK economy and supports jobs.
As the budget announcement approaches, the future of gambling taxation remains uncertain, with potential implications for both the industry and its consumers.
