European welfare states (e.g., Kaelble 2004) are founded with similar goals concerning the protection of citizens against the economic risks of old age, illness, accidents and unemployment. Services are provided under various forms of welfare regime (e.g., Esping-Andersen 1990, 1999; Hall and Soskice 2001; Streeck 1999), and obviously need to be financed. The pecuniary premise has been based on efficient taxation of the population and of corporations operating within a territory. All this changed alongside the general liberalisation of the market economy during the 1980s and 1990s, when the proportion of corporate-tax revenue declined. The bulk of the tax-revenue burden is now on average earners or consumers, especially in the form of sales and excise taxes (Teeple 2000; Murphy and Christensen 2012; OECD 2016). The slower economic growth has further increased the financial burden on welfare states (e.g., Myles and Quadagno 2002), and in particular the effects of the financial crisis of 2008 (Cresby 2016) and the loss of manufacturing jobs (e.g., Chakrabortty 2011), only partly recompensed by an economy of speculation (Sandel 2013). Ageing populations also require more investment in healthcare and pensions (Rogers and Philippe 2016). The message of the gambling industry is alluring: it has the potential to boost economic growth, generate jobs and deliver much-needed tax revenue to pay for public services.
Gambling has a long history as a supplementary funding source for social services. Nowadays, public revenue from gambling comprises, on average, one to two per cent of the value of national budgets, in many cases equalling the revenue from tobacco and alcohol products (Sulkunen et al. 2018). The perception of gambling as âvoluntary taxationâ levied on discretionary spending has made it is easier for governments to accept it as an ordinary leisure industry. Governmental-level promotion of gambling during the last few decades has persisted even in situations in which popular opinion about the activity has remained negative or, at best, ambivalent (Orford 2011). The rise of Internet gambling and the free movement of goods and services across the internal borders of European Union (EU) member states explain this to some extent, but the increase in gambling availability started before that, and it seems to have more to do with the influence of neoliberalism and with financial needs.
However, the economic returns may not be as high as they initially appear. The extent of gambling-related harm was poorly understood for a long time when wide-scale gambling was legalised across Europe during the 1980s and 1990s. Only in the 2000s have improved research methods and increased research funding allowed the pinpointing of these negative outcomes (e.g., Langham et al. 2016). Gambling incurs a number of social costs, ranging from problem gambling to increased criminal activity, family disruption, health issues and economic difficulties (see Sulkunen et al. 2018 for a summary). It has been estimated that there may be up to ten million problem gamblers in Europe (Jensen 2017). Gambling does create employment, but the jobs tend to be low paid, and may not contribute to the overall wellbeing of the community (Grinols 2004). The taxation effects of gambling are regressive (see e.g., Barnes et al. 2011 on lotteries) or even exploitative (Young and Markham 2017), as Karl Marx noted already in ([1852] 1963) (cited by Garvia 2007). Studies from across jurisdictions have shown that up to 60% of gambling revenue derives from problem gamblers (SchĂŒll 2012). People from lower socio-economic groups and ethnic minorities also tend to gamble more, particularly on lotteries (Beckert and Lutter 2013). Gambling-related revenue collection therefore disproportionately burdens those who can least afford to contribute (Henricks and Brockett 2014), but also raises questions concerning whose responsibility âresponsible gamblingâ is (e.g., Hancock and Smith 2017). The redistribution of gambling funds also creates systemic problems. Adams (2016) maintains that the consumption of gambling profits may be even more problematic than the consumption of gambling products, and evidence of the redistribution of gambling funds in Australia (Livingstone 2018) as well as the individual case studies of this volume supports this. 1
Proceeds from gambling may be used for public purposes based on a variety of institutional arrangements. The majority of gambling revenue goes to state treasuries via taxes, licence fees and state ownership. The use of the Treasury to fund the welfare state then follows the normal procedures of democratic decision-making in parliament concerning the state budget. In addition, gambling revenues are also used for designated purposes. In this case, proceeds tend to be earmarked for, and then channelled to non-profit actors, civil society organisations (CSOs) or local administrators. The idea is to provide funding for âgood causesâ that may go beyond the original idea of welfare-state expenditure, introduced to gain trust in the government in times of distress (e.g., Schmidt 1998). Causes supported with gambling money include sports, youth work, culture, social work and research, which were taken under state control during the creation of nation states and the expansion of welfare states. This approach has become increasingly dominant as non-governmental actors and CSOs have taken a stronger role in welfare-service provision (e.g., Miller and Rose 2008; Rantala and Sulkunen 2006).
States also differ in how gambling is operated. The state can offer gambling in the form of a state-owned monopoly. Another option is to allow non-profit actors to organise gambling and directly benefit from itâtraditional raffles in churches and workersâ clubs are a good example of such gambling operations (e.g., Bedford et al. 2016). Finally, private companies are in many countries allowed to offer at least some types of gambling, provided they obtain a licence or concession. Even when private companies are allowed to enter European markets, they come up against strong state regulation and fiscal control. Their gambling revenues contribute towards a countryâs welfare by taxation and licence/concession fees, and they also sometimes support âgood causesâ directly in the name of Corporate Social Responsibility (CSR) or legislative arrangements. Sometimes states are significant shareholders in private gambling operators, which blurs the line between different kinds of gambling operators and welfare contributions (Bereiter and Storr, this volume). Table 1.1 shows how the country cases of this volume fit into our suggested typology of operators and beneficiaries of gambling. Natural cases are never clear-cut and thus fit into several categories, but table serves as a representation of main types.
Table 1.1
Beneficiaries and operators of gambling
Beneficiary â Operator â | State treasury (via taxes, state ownership and licence fees) | Earmarked for designated purposes |
|---|---|---|
State (monopolies) | France, Italy, Poland, Spain | Germany, Norway |
Non-profit actors (e.g., clubs, CSOs) | Iceland, Netherlands, Ireland, Spain, Sweden, Britain | |
Licensed (or concession) private companies | Austria, France, Germany | Slovenia, Britaina, France, Italy |
Cases where the state is the operator as well as a direct beneficiary of some, although not all, forms of gambling are France, Italy and Spain (Marionneau and Berret; Rolando and Scavarda; Becoña and Becoña, this volume). With the new gambling legislation of 2016 and increased involvement of the state monopoly, Poland is a recent addition to the category (see Wieczorek and Bujalski, this volume). Norway is another example of a country that is consolidating its state ownership and operation in the EGM (Electronic Gambling Machine) market, but in this case a considerable part of the revenues are earmarked for certain designated purposes (see Borch, this volume). In Germany, state lottery revenues are designated for social services (Loer, this volume). In Austria and France, the state is also a shareholder in private gambling companies. The treasury therefore benefits not only through taxation and direct levies, but also in dividends based on company profits (Bereiter and Storr; Marionneau and Berret, this volume).
Slovenia, Britain, France and Italy are examples of countries in which part of the profit...