New research released today shows that the UK is potentially missing out on billions of pounds of investment through its over-regulation of the gambling industry. Strict gambling laws are also leading to pub closures and do nothing to reduce the problem of addiction.

In a study published in its termly journal Economic Affairs, the Institute of Economic Affairs shows how other countries are reaping the reward of liberalising their gambling laws, and how relaxing gambling regulation could be the factor which saves many of Britain’s struggling pubs. The study also contends that gambling is over-regulated in the UK because it is seen as purely harmful – the converse is true.

Missing out on economic growth

• Other countries, such as Australia and Macau, have reaped huge financial rewards through liberalising their gaming laws


• Macau started granting licences for destination-resort casinos in 2002
  
  
  
  • New licensees have spent an estimated $20bn constructing casinos since then
  
  
  • In less than five years, Macau became the largest gambling market in the world
  
  
  • In the first six months of 2010, Macau’s gambling revenues rose 66.9% compared with the first six months of 2009. Tourism increased by 17.9%.
  
  
  
  


• There are no destination-resort casinos in the UK, or EU


• Destination-resort casinos, like those seen in Las Vegas, bring in foreign investment, foreign money and create many side benefits


• Currently in the UK, only smaller, ‘convenience’ casinos are allowed.
  
  
  
  • However they are more likely to simply re-circulate local pounds, primarily from customers who are most prevalently minorities with low incomes.
  
  
  
  

A lifeline for struggling pubs

• In the early part of 2009, pub closures peaked at 52 per week


• Current gambling laws however stop pubs from diversifying their offerings, e.g. by running poker tournaments, and competing with casinos in terms of experience
  
  
  
  • Total prize pools are capped at £100, and players are restricted to a £5 stake over a 24-hr period
  
  
  
  


• It is difficult to ascertain any public benefit from these strict policies. In fact, the only beneficiaries are likely to be casinos who are protected from further competition

Gambling prevalence

• Prevalence of gambling in UK has slightly diminished in the last decade (72% of over-16s had participated in some form of gambling in 1999; this had fallen to 68% in 2008)


• The estimated number of problem gamblers in the UK is 0.5%, or around 250,000
  
  
  
  • This compares to the 24% of all adults who were classified as hazardous drinkers in 2007
  
  
  
  


• The more gambling is restricted, the more likely addicts are to use illegal forms – with all the associated consequences
  
  
  
  • Most gambling critics ignore the enjoyment derived from it, and assume that the potential monetary outcomes are more important
  
  
  
  

Mark Littlewood, Director General of the Institute of Economic Affairs, said:

“Britain is losing out. The benefits being reaped by other countries are clear to see, yet the stigma and myths that surround gambling in this country prevent us from relaxing our laws to maximise economic gain.

“The amount of freedom afforded to gambling in the UK is nowhere near enough. We desperately need to encourage economic growth; liberalising our gambling laws would be a simple way to help achieve it.”

Chris Brady, Dean of BPP Business School and Editor of the latest edition of Economic Affairs, said:

“Gambling is about far more that simply winning money, and that is what its critics always fail to grasp. By failing to liberalise the law, politicians over the years have felt that they are somehow protecting society from avarice.

“The experiences of other countries – where vast entertainment complexes and whole tourism industries have grown up following newly-liberated gaming laws – demonstrate how it is the thrill of the calculated risk which, as in many sports, is the true draw. People should be free to do with their own money as they wish – it’s time for the state to take a giant step back.”

Notes to editors

To arrange an interview with Mark Littlewood, IEA Director General, please contact Stephanie Lis, Communications Manager, 020 7799 8900 or 07751 717 781, slis@iea.org.uk.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.