Gambling Taxation Research Articles

REFORMING OF GAMBLING TAXATION IN UKRAINE IN THE CONTEXT OF THE EUROPEAN INTEGRATION

The article is devoted studding the reforming of gambling taxation in Ukraine in order to choose the most optimal model of taxation for Ukraine, taking into account the foreign experience of European countries, Ukraine’s commitments to the EU. By signing the Association Agreement with the EU, Ukraine has committed itself to bringing its national legislation in line with EU law. There are no direct commitments of Ukraine to the EU to establish some regulation of the gambling business in Ukraine. However, all European countries regulate gambling at the level of national legislation. Gambling has been allowed in Ukraine since 2020, but the current model of gambling taxation creates an excessive tax burden on the industry and contributes to the spread of illegal gambling. The article analyzes the current model of gambling taxation in relation to the cost of the license and in comparison with the tax models of other European countries. The authors conclude that European countries use a simple approach: "expensive" licenses – low taxes or "cheap" licenses – high taxes. However, Ukraine regulates gambling on the principle "expensive" licenses – high taxes, which does not contribute to the development of the legal gambling market, but on the contrary, the gambling business operates illegally. The authors also analyzed existing proposals to change the gambling tax system, as proposed in Bill №2713-d, and concluded that the proposed model contains a number of gaps that, if passed, could be used to commit crimes related to with the gambling business, and, as a consequence, to the growth of crime in Ukraine as a whole. Among the crimes related to the gambling business, the authors include: legalization of proceeds from crime (arms, drugs, smuggling, etc.); legalization of corrupt income; tax evasion, etc. In this article, the authors provide specific suggestions for improving the provisions of the bill, which will significantly reduce the risk of gambling-related crime.

ЗАКОНОДАВЧА ФОРМА ПУБЛІЧНОГО УПРАВЛІННЯ ГРАЛЬНИМ БІЗНЕСОМ

The article deals with the form of public governance of gambling in Ukraine from 2020 – the state monopoly on the organization and conduct of gambling. Based on the generalizations of the world's existing forms of public management of gambling, it was concluded that the state monopoly is the most successful model of public administration for our state. But the form of its implementation (a kind of state monopoly) is manifested, considering the historical development of our country, the peculiarities of its society, the tendency of the population to form gambling addiction, society's attitude to gambling, forms of government and more. Today, Ukraine is introducing a second type of state monopoly – free access to the gambling market for companies (subject to organizational and qualification requirements), while limiting the maximum number of gambling establishments that can operate simultaneously in the country. At the same time, in the future it is possible to combine this type with special territorial gambling zones (the Cabinet of Ministers has the right to determine no more than five of them on the territory of the state). Based on the study, the author offers to improve national legislation on gambling taxation and to introduce the idea of social utility of public gambling management for the full implementation of Ukraine's chosen model of state monopoly. Keywords: gambling business, organization and conduct of gambling, state monopoly, special gambling zones, gambling establishments

Taxing Gambling Machines To Enhance Public and Private Revenue

SUMMARYElectronic gambling (‘slot’) machines are a key component of the global gambling industry. We introduce a theoretical framework which shows that under reasonable assumptions, shifting from a per‐machine licence fee to a gross profits tax (GPT) on machine revenue can help to resolve policy tensions between industry profitability, economic growth and government revenue. We test the theory using data on recent changes to gambling taxation in the UK, in particular the move to a gross profits‐based Machine Games Duty (MGD). Our results reveal that the shift from licence fees to a revenue‐neutral MGD led to a significant increase in the number of machines, as predicted by the theory, and in machine revenue. These results provide useful guidance for all parties involved in the gambling taxation debate, especially those jurisdictions that are considering or are open to a change to their gambling tax system.

The Winners and the Losers: Tax Incidence of Gambling in Finland

Gambling markets have grown rapidly for the last few decades. As a result, gambling is also a very important and common source of tax income for many governments these days. This raises a question about the overall fairness of the gambling taxation systems. In this paper, we aim to study the tax incidence of gambling in Finland. First, we analyse who are the expected payers of the gambling taxes and second, who are expected to be the receivers of the gambling-tax based contributions. In the first part of the study, we analyse the demographic incidence of gambling taxation by using the Finnish gambling 2015 population survey combined with registry based variables. Our data contains 3776 individuals. In the second part of the study, we use data of county level gambling-taxation based contributions to different organisations to analyse how the gambling expenditures are distributed back to citizens in a form of public spending. This study shows that different socio-demographic factors have diverse association with the decisions whether or how much to gamble. The results also suggest that more disadvantaged, i.e. lower income, less educated and rural area living, individuals are expected to be the “losers” of the Finnish gambling taxation system. In other words, the Finnish gambling system is found to be regressive by nature.

Distributional effects of gambling taxes: empirical evidence from Italy

Deep changes have taken place in the regulation of Italy’s gambling market during the last decade, making it by far the largest in Europe. Tax revenues from the gambling sector raised by the State have grown sharply, reaching more than € 10 billion, corresponding to more than 2% of total tax revenues. Concurrently with these developments, concerns have arisen over the distributional effects of taxes applied to gambling, given that it is internationally recognized that poorer individuals are more attracted to gambling. At present very little is known in Italy about the economic effects of gambling taxes and about their potential regressivity also in comparison with other sin taxes. The aim of this study is to increase our understanding of the incidence of these taxes, comparing the results with those obtained for a selection of other sin and consumption goods. After thoroughly investigating the gambling taxation scheme applied in Italy, we exploit two-part models to study the relationship between gambling tax paid by households and their socio-economic status, measured, alternatively, in terms of income and expenditure. The analysis shows that gambling taxes are highly regressive and opens important questions on possible reforms of the current system. Despite its focus on the Italian context, the analysis offers new insights also for those European countries that in last years have been involved in a process of progressive deregulation of the gambling sector.

Gambling Taxation in Today’s Russia: Principles, Practices and Actual Figures

The article is devoted to today's situation and prospects for the development of gambling taxation in the country. The gambling industry is continually developed. Currently, this type of entrepreneurial activities can be found almost throughout the Russian Federation. But the problem of gambling industry is associated, to a large extent, with the fact that it is rather difficult to control the income and expense of bookmakers, owners of casinos and slot machines.Insufficient transparency of gambling industry leads to new restrictions or prohibitions by the state, instead of implementing an effective taxation system. As the objects for the study, the authors selected the main elements of the tax on gambling.In this article the dynamics of the number of taxpayers, subjects of taxation and amount of budget income by taxing the gambling industry over time is analysed. As a result of the study the problems of gambling taxation are defined and their possible solutions are proposed.

Taxation of Gambling in the United States: Comparing the Current System with Two Alternatives

ABSTRACT Under current federal and state laws within the United States, the taxation of gambling activities is complex and largely inefficient. At the federal level, taxes on gambling providers are virtually nonexistent outside of normal corporate taxation laws. At the state level, the varying tax regimes within states lead to a complicated reporting environment, with differing calculation methods and varying tax rates for gamblers and gambling operations. For individuals, tax reporting can be cumbersome, complex, and ineffective. This paper discusses the current tax reporting environment in the United States, as well as the tax environments in other nations with large gambling industries, such as France, Macau, Singapore, and the United Kingdom. Finally, we calculate an estimate of tax revenues on gambling earnings based on the current U.S. tax regimes and compare them to hypothetical tax revenues calculated by using tax regimes in foreign jurisdictions. Data Availability: All data are publically available and cited in the article.

Taxation of Gambling in Europe—Barrier to Entry into New Markets?

Taxation of Gambling in Europe—Barrier to Entry into New Markets?

The Inside and Outside Revenue Impact of Regional Gambling Taxes in Spain

AbstractUsing panel data methods, for all the Spanish Autonomous Communities and for the period 1999–2009, the present study estimates the revenue of the casinos in each Autonomous Community on the basis of four variables of interest related to the taxation of gambling in each Community, the taxation in the neighboring Autonomous Communities and the expansion of online gambling, and certain economic and sociodemographic control variables. The estimation performed permits the verification of the hypotheses that the taxation of gaming in a region and the expansion of online gambling negatively affect the revenue accrued by the casinos located in that region, but does not offer evidence that the effect produced by the differences in taxation among neighboring regions is significant. The results obtained also confirm the expected impact on the casinos' revenue of the existence of “type” gamblers (young males, and tourists) and of the economic situation (income and unemployment).

Productivity Measurement in Gambling: Plant‐level Evidence from the United Kingdom

Although gambling is one of the fastest‐growing service industries, there have been no studies of total factor productivity (TFP) in this sector. We attempt to fill this gap using establishment‐level data from the United Kingdom. We also discuss key measurement issues in calculating gambling productivity and estimate labor and TFP equations, based on a stochastic frontier production function framework, focusing in particular on the impact of information technology on productivity. Our preliminary results suggest that the production function models fit well, generating plausible elasticity estimates. We find consistent evidence that productivity increased following major reforms to gambling taxation in 2001. Our findings yield limited evidence of regional variations in efficiency. Another key preliminary result is that internet operations appear to be associated with higher relative efficiency.

Taxation and the Demand for Gambling: New Evidence from the United Kingdom

In October 2001, the U.K. government implemented a dramatic shift in gambling taxation, resulting in a substantial decline in taxes levied on U.K. bookmakers. Using data before and after this event, we present econometric evidence on the demand response to this tax reduction. Our results imply that the demand for bookmaker gambling is highly sensitive to the rate of taxation and that the decline in the rate of taxation resulted in a large increase in the demand for onshore betting. The U.K. policy initiative provides useful information for policy makers in other countries who are contemplating changes in gambling taxation.

Gambling as a Base for Hypothecated Taxation: The UK's National Lottery and Electronic Gaming Machines in Australia

Gambling is now a large revenue source for many governments due to its ease of implementation, popular appeal and the high real tax rate it can bear (up to 40%). It is often promoted by spending on 'good causes' designated as 'additional' to existing government activity. This article examines the UK's National Lottery and Electronic Gaming Machines (EGMs) in Queensland, Australia and shows that, in both cases, gambling taxes are often diverted into education, health and social and economic development and therefore potentially substitute for taxation raised elsewhere in the economy. In addition, there is evidence that gambling's taxation implications (against income) are doubly regressive, taking disproportionately from lower income groups and giving to those better off.

Gambling Taxation: Public Equity in the Gambling Business

Government's intrinsic role in sustaining a viable gambling industry, and its significant revenue stake in industry profitability, can make the public effectively shareholders in the industry. An important social cost of gambling is the potential for corruption of democratic processes through close industry and government links. Government can increase gambling revenues by expanding the tax base, rather than by raising tax rates. Gambling tax rates have fallen in recent decades, while revenues have increased dramatically. This paper analyses the forces encouraging governments to give excessive priority to protecting gambling revenues. It finds gambling taxation is regressive, and increasingly so as access widens. ‘Children, madmen and fools' are significant to the market. The transition to a goods and services tax, along with the recent inquiry by the Productivity Commission into gambling, provides an opportunity for gambling policy to be made in a coherent social and economic framework, rather than as ad hoc and short‐term solutions to State governments' revenue problems. Such an outcome rests on the Commonwealth government playing a leadership role.

The Wages of Sin: Taxing America's Legal Vices

Although state taxation policies have received some attention in political science (e.g., Hansen 1983), the taxation of alcohol, tobacco, gambling, and similar products has been virtually ignored.' This absence of analysis is surprising because sin taxes, as they are commonly called, produced $14.1 billion or about 5.6 percent of all state government revenues in 1987.2 In addition to being an important policy phenomenon, sin taxes have become an important political phenomenon. Considered a relatively easy tax to levy, sin taxes allow legislatures to raise revenue without also arousing the ire of voters. Advocacy groups that would like to limit drinking, smoking, or gambling also support raising taxes on these vices. Sin tax policies provide an opportunity to examine a public policy that is highly salient yet lacking in complexities that would limit public participation. They also permit us to integrate several areas of policy studies that are usually studied separately. Program design questions such as the impact of various sin taxes on state revenues can be addressed. The politics of policy-making can be examined by an analysis of the forces that influence sin tax policies. Finally, policy impacts can be assessed by considering the effect of sin tax policies on consumption. This study examines state policies on taxation and sale of alcoholic beverages, taxation of cigarettes, legalization and taxation of gambling, and the adoption of state lotteries. Several empirical questions are addressed: (1) how do sin tax policies affect state revenues; (2) what are the political forces that explain policy actions (tax rates, legalization of gaming, etc.); (3) what political forces explain policy outputs (revenues raised, revenue

Taxation of Gambling in Australia

Abstracts This paper examines taxation of gambling in Australia am) shows the proportions of taxation that each State receives. An interstate comparison of the components of gambling taxes is undertaken and some reasons for the differences between States arc given such as the contributions to hospitals and the staid nature of residents of some other States. Taxation of gambling in NSW is examined in some depth and lottery revenue is used as an illustration of the growth, decline and resurgence of this taxation source. This paper shows the declining tax rate from lotteries since the middle 1940s to the early 1980s and the dramatic re-emergcnce of lottery revenue as a taxation source since the introduction of Instant Lotteries in NSW.

Taxing Horse Race Gambling: the Revenue Potential

The revenuo potential of horse race gambling taxation is analyzed by compar-Abstract ing and reconciling the results of recent studies by Gruen and Suits. The different results are reconciled by analyzing the horse racing industry with the traditional theory of a monopoly. The optimum tax rate is calculated for the two sets of data and is only slightly above the actual rate. The state is currently realizing most of the revenue potential from this type of taxation.