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Compulsory Donations to Gambling Trust

January 12, 2009

Problem gambling is an issue that governments are grappling with. In the United Kingdom there are an estimated over 250,000 problem gamblers and an estimated 1.25 million on the brink of problem gambling. Considerable research is being conducted into the causes, prevention and cure of problem gambling. All this research requires large funding. In the United Kingdom the online gambling industry makes voluntary contributions to the Responsibility in Gambling Trust (RIGT). This system was established in 2001 when the trust was formed in response to a government commissioned review. 80% of the donations are given by 30 major donors, who contribute to 95% of the gambling turnover in the United Kingdom. There has been some friction between the online gambling industry firms and the government in the past and this has led to the government proposing a tax instead of the voluntary contributions.

The Culture Secretary, Andy Burnham, set the ball rolling when he reported a shortfall of GBP 1.2 million in the target for the donations for the year 2008-09. In order to sort out the recurring issue for good the government is proposing a compulsory donation system. This will leave no doubt as to who is to pay how much and when and will ensure that the funds are available for the research as required. A consultation document in this regard has been released by the Sports Minister Gerry Sutcliffe. Small, on-course bookmakers will be exempted from the compulsory donation system. Others will be required to pay from GBP180 to over GBP 100,000 a year depending on the size of the business. The government has given the gambling industry 12 weeks to work out a voluntary deal. If this is not done then the proposed legislation will be put in place from June 1, 2009. The target for the financial year 2009-10 has been set at GBP 5.3 million. This will increase to GBP 7 million for the financial year 2011-12.

Russ Phillips, the chief executive of the Association of British Bookmakers, has protested against this move. He has argued that the gambling industry is not protected against the economic downturn. Because of the fall in revenues there has been a limitation on how much the industry could raise. Ladbrokes is one of the online gambling firms that have decided to participate in the voluntary consultation process. A spokesperson for Ladbrokes said that financially they would not be affected either way because they are making the voluntary contributions, but as a matter of principle they would like to stay with the voluntary system. According to them it is the smaller operators that have been badly hit by the economic crisis. Ladbrokes is willing to subsidize them to some extent but cannot afford to completely subsidize them.

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