Contribution
Thank you, Mrs Harris.
I will put some numbers on my discussion of the value of regulated versus unregulated advertising. The regulated market is expected to decline by more than £107 million this year, but unregulated companies will increase their expenditure to £845 million this year, which is up 32%, and to £934 million by the end of 2028, which is another 10% rise. A significant proportion of that investment originates from overseas companies that are not paying British tax, not regulated by the British market and not subject to British laws.
It is not just about advertising. More advertising by unregulated and illegal gambling companies only drives people to the harmful, unregulated and untaxed black market. Stakes on the illegal market are already estimated to equate to £4.3 billion per year. A PwC report based on H2 Gambling Capital data shows that the size and growth of the UK’s unregulated market has increased in recent years, alongside the implementation of tighter regulations. In my opening, I mentioned that regular betting and gaming contributes £6.8 billion to our economy and generates £4 billion in taxes—£4 billion that the Treasury could potentially lose. The effects of that are self-evident.
There are other measures that are squeezing people. The Gambling Commission has found that there are concerns about the introduction of new checks and how intrusive they may be. The last Government wanted to pilot that scheme, and there are potential benefits to it, but we have to be a bit careful, because the concern is that blanket checks are being brought in without a pilot scheme. People are naturally nervous—the regular people who like to have a bet are concerned—about the intrusive nature of what private companies, and indeed the Government, are doing to try to access their financial data. We need to be wary of that, because it can put people off using British, regulated companies and push them toward foreign, unregulated spaces that are not subject to the same gambling taxation, which often allows for more attractive stakes and so on.
All of that is drawing people into a place we do not want them to be in. We do not want to over-regulate our own market and force people into a place that is of no advantage to us and that we have no influence over. We must be very mindful of that, whether it is gambling or any other sector.
The modelling shows a depressing outlook for the industry under the current taxation system. There is some very headline-grabbing stuff: Coral has pulled out of its deal to sponsor Cheltenham, and the industry expects to lose 16,000 jobs across the UK, a number of which are high-tech jobs. This is a high-tech industry these days; there is a huge online element to it, as we know. Those jobs will be lost in places such as Stoke, Warrington, Leeds, Sunderland, Manchester, Nottingham and Newcastle-under-Lyme where the successful gambling firms are based. Those job losses will then filter down to the gambling shops on our high streets; in recent weeks, we saw William Hill announce the loss of 200 high street stores.
Beyond the costs to the taxpayer and people’s jobs and lives, gambling advertising and sponsorship also supports broadcast media and sports across the spectrum. As well as regulated advertising falling, the WARC report also found that sponsorship by regulated companies plateaued in 2021 and is set to decline. That sponsorship covers prize money, along with increased levels of interest, competition and viewership. It is a virtuous circle. It gets people enthused by sport and gets them involved. It is not something that we should see as simply a bad thing to do.
Given that much free-to-air sports coverage—along with the lower levels or grassroots of certain sports—is largely dependent on this advertising revenue, there is a risk that we will further lose free-to-air coverage because sports will have to look to a more lucrative broadcast deals. Look at examples from the grassroots, with those firms sponsoring lower league clubs in football and the good work that they do there to support grassroots football—it is not just about what is going on in the premier league. We see less of those things on a day-to-day basis, but they are going on in clubs across the country.
While sponsorship by regulated companies plateaued and is falling, total sponsorship by the gaming sector has grown, from £158 million in 2019 to £250 million this year. The growth is not by those regulated companies, however. Unregulated firms have accelerated their sponsorship—more than tripling it in the same period—and by next year more than half of sponsorship will be by unregulated firms.