A macroeconomic study examining the impacts of the UK Gambling Act review has concluded that the agreed reforms would result in only a “limited net negative effect on the wider UK economy”.

The assessment has been published by the National Institute of Economic and Social Research (NIESR), Britain’s oldest independent economic research institute, which evaluates the macro-economic consequences of regulatory and fiscal policy changes/reforms.

The study is co-authored with the University of Glasgow as an assessment of “The Macroeconomic Impact of Reducing Gross Gambling Yield: An Empirically-Informed Model”.

Researchers sought to analyse how reforms proposed under the Gambling Act review White Paper, published in April 2023, could affect wider economic activity, growth and efficiencies.

Low macro effect on UK economy 

In its overview, the study states that “proposals for new gambling regulations, which are projected to reduce the income of the gambling industry, are unlikely to substantially affect the UK economy in a negative way.”

Economists estimate that while the reforms could reduce Gross Gambling Yield (GGY) by up to £812m, “only around £134m would translate into a net macroeconomic loss once redirected consumer spending is accounted for”.

GGY impacts are projected on a basis of a 3%-to-8% impact on Gross Value Added (GVA) contribution of the UK gambling sector with figures reported by DCMS in 2019 to stand at £8.3bn – figure indexed by researchers.

The NIESR study models a projected Gross Gambling Yield (GGY) reduction of between £329m and £812m annually, using the higher £812m figure as its “maximum-impact scenario”.

Researchers believe that the projected downturn will fall disproportionately on online gambling verticals, which have faced the greatest concentration of White Paper reforms and regulatory adjustments.

White Paper elements yet to be fully implemented

Following publication of the White Paper, the UK has proceeded with a series of online restrictions, including tighter controls on bonuses and VIP incentives during 2024, alongside the implementation of £5/£2 online slot stake limits, which came into action in 2025.

Concurrently, the Gambling Commission strengthened Licence Conditions and Codes of Practice (LCCP) duties relating to customer interaction, financial vulnerability monitoring and consumer protection measures throughout 2024 and 2025.

However, the White Paper’s headline proposal of “light-touch” affordability checks – now formally referred to as financial risk checks – remains under a phased pilot review. 

The framework began testing in August 2024, using thresholds for online losses above £500 per month, with a tighter £150 threshold proposed from February 2025 onward.

Undertaking a survey on gambling behaviours, which has been modelled on the habits of 1,320 participants, the research concluded that from the White Paper’s projected £812m reduction in Gross Gambling Yield (GGY), only around £134m – approximately 16% – would translate into a net macroeconomic loss for the UK economy.

As cited by the University of Glasgow: “The determination is based on the view that gambling expenditure does not simply disappear from the economy, but is instead reallocated through changing consumer spending habits.

“Economists note that most of the projected revenue decline is expected to come from online gambling, which carries lower economic multipliers and weaker domestic supply-chain impacts than land-based gambling operations. 

“Furthermore, many participants indicated that reduced gambling expenditure would likely be redirected towards savings, debt repayment and essential household spending, all of which can contribute to future economic activity beyond the scope of the study’s static modelling.”

iGaming holds poor economic output 

The study argues that the majority of the projected reduction in UK gambling GGY would not disappear from the wider economy, but instead be redirected towards sectors with stronger domestic multiplier effects than online gambling.

The macroeconomic modelling is based on sector-specific economic multipliers, with redirected consumer spending expected to flow towards categories such as Utility & Transport (2.38), Food and Everyday Shopping (1.69), Entertainment & Leisure (1.79) and Home Spending (1.66). By comparison, gambling is assigned a multiplier of 1.82 within the model.

However, researchers stress that the 1.82 gambling multiplier likely overstates the real economic contribution of online gambling, as much of the projected GGY decline is expected to come from online operators that carry higher “offshore leakage”. 

“If money is diverted to other goods/services which have greater economic multipliers than the gambling industry, the net economic impact is positive. Most reductions will come from online gambling — which has lower economic multipliers than land-based operations — the actual net negative impact is likely less than £134 million.”

Tax is the baseline benefit of UK gambling

Tax generation is viewed as the economic baseline of the UK gambling sector, which contributed around £2bn annually in gaming duties prior to COVID-19, with the Office for Budget Responsibility (OBR) projecting betting and gaming duties to reach approximately £4bn annually by 2025/26. 

Corporation tax receipts from gambling operators are estimated at around £200m per year.

Of significance, however, economists acknowledged that the long-term economic impact of UK gambling reforms will remain closely tied to the rising influence of the black market.

On this issue, the research found that 73% of participants stated they would not divert spending to unlicensed gambling operators, while only 8.5% consistently selected unlicensed gambling options across both test scenarios.

When black market migration is factored into the modelling, the estimated net economic loss rises from £134m to approximately £189m, equivalent to around 23% of the projected GGY reduction.

On political conflicts, the NIESR economist views “industry lobbying focuses too heavily on these ‘gross’ figures while ignoring spending substitution effects”.

“In making these arguments, the economic figures quoted by the gambling industry focus on their ‘gross’ contributions – that is, their total contributions via duty and employment. They do not consider the ‘net’ impact, that is, economic gains (or further losses) that may result if money not spent on gambling is diverted to other areas.”

As such, researchers argue that the economic effects of gambling policy should consider the condition of “substitution effects generated when consumers redirect spending to other sectors of the economy”.  

Adrian Pabst, Deputy Director of the National Institute of Economic and Social Research concluded: “There is no necessary trade-off between enhanced regulation and greater economic growth. 

“Our work shows that the new gambling regulations will have a very small negative impact on the UK economy and that there are potential benefits in terms of people who gamble regularly saving more or redirecting their consumption to other sectors. 

“Industry fears about a massive hit to economic activity are overstated and also ignore the wider social benefits of the regulatory changes.”