Socio Economic Effects of Gambling: Evidence from Kampala City, Uganda

Abstract

Since the year 2000, the gambling industry in Uganda has experienced a rapid increase in activity, with various new modes and facilities being introduced. The proliferation of gambling has seen the industry diversify from the early forms of gambling like casino gambling and national lotteries to new modes like sports betting and online betting among other forms. Regarding gambling related tax revenues, the industry has equally grown at an unprecedented rate, with tax collections growing from UGX 0.24 billion in 2002/3 to UGX 11.1 billion in 2013/14. While this growth in tax revenue is a welcome development, there is still considerable concern about the potential for the gambling sector to cause harm in form of addictions, loss of savings, idleness and increased crime. Hence, as the gambling industry continues to grow in popularity and prevalence, a well-founded understanding of its operations and socio economic implications is imperative. This study sought to fill this void by investigating three questions: 1) What is the level of participation in the gambling industry in Kampala city?; 2) How does gambling affect various aspects of welfare and the economy and 3) What is the adequacy and effectiveness of the current regulatory framework in regulating the gambling sector?. Based on a household survey conducted in Kampala city in April 2015, we find that approximately one in every four adults had engaged in some form of gambling in the twelve months preceding the survey. Age, income, employment status and gender are major determinants in gambling participation. Additionally, we find that, on average, the poorest in society spend a higher proportion of their personal income on gambling compared to their richer counterparts. Gambling also has the greatest displacement effect on household necessities and savings and has to some extent led to problem gambling. In terms of revenue, the percentage contribution of the gambling industry to total revenue is still low (0.15% in 2013/14) but growing. Furthermore, qualitative evidence revealed that many facets of the law relating to lottery and gaming have become obsolete and are not sensitive to the new modes of gambling and the unprecedented growth of the industry. Similarly, the regulatory body (National Lotteries Board) has substantial capacity problems and limited statutory powers and is not always able to effectively exercise its mandate herein inhibiting its ability to comprehensively regulate the gambling industry. On the policy front, we propose that the public should be protected from over stimulation of latent gambling through limitation of gambling opportunities: by imposing tighter restrictions on advertising; tighter restrictions on entry into gambling establishments, based on age; and limitation of opening hours among others. In congruence, parliament should expedite the passage of the Lottery and Gaming Bill (2013) into law to empower the National Lotteries Board with more statutory powers and provide a basis for addressing capacity and financial challenges that they currently face. In line with this, there is a need to minimize the negative social and economic impacts of gambling by promoting responsible gambling and providing support and counselling to problem gamblers.