Evaluate the extent to which an increase in tax on gambling is the most effective method of reducing the market failure associated with excessive gambling in the UK
marketing论文代写 Gambling is not only compelling a clang on the life of a gambler but also on the lives of all his/her relatives who surround him/her.
Gambling is not only compelling a clang on the life of a gambler but also on the lives of all his/her relatives who surround him/her. It can disturb the monetary permanency of a clan; relations might be finished and finally risk the psychological fitness of the gamester (Reith and Wardle, 2019). This game has been prepared at ease to control from past years. It is no time-consuming indispensable for societies to go to gaming clubs to play this game. Now Lots of gambling daises are accessible online. This rise in the convenience of betting centers/sites has also funded the improved figure of gamesters globally.
Market disaster is the financial condition that compacts with an incompetent spreading of threatened means in an open market. Persons make varieties founded on self-regard which will at the culmination of the day be eviler bad for the community. The process and customer though adversely upsetting the social order (negative externalities), or they can help both the folks and the culture (Positive externalities) (Kenton, 2020).
Intervention Government intervention in an economy aims to overcome market failure. They aim to improve the distribution of resources. The government uses different measures to try and increase the private cost of externalities to reduce the use of goods which causes negative externalities. They make use of measures such as tax increases, the establishment of specialized agencies to deal with such issues, and sometimes, a complete ban of some activities (Pettinger, 2019).
Gambling serves as a form of entertainment and as a way of making easy money. The gambler and the company which owns the betting platform benefit from this transaction. However, gambling can become highly addictive, and when this happens, it tends to harm the economy. The betting industry’s selfish desire to gain profit regardless of the externalities that excessive betting can lead to is what drives them to continue producing, and this will ultimately lead to a breakdown in the market structure. According to research, about 2.5 million people in the UK participate in online gambling, and of this amount, nearly 1.4 million people have been discovered to be problem gamblers. It was also reported that about 3.6 million people had been affected by problem gamblers. So, in total, about 5 million people have suffered the effects of gambling either directly or from association with a person involved (Davies, 2020).
In the UK, the number of betting premises has progressively reduced over the past eight years as online betting has gained more acceptance.
The first omission, however, is in the number of casinos which increased 149 in 2011 to 155 in 2019 (+4%). Arcades have experienced the highest amount of closures, decreasing by about 30% from 2,396 to 1,633 in the past eight years. This has made it easier for people to gain access to gambling sites, and with increased ease, more people are likely to get involved and eventually become addicted. This addiction will cause the gamblers to be a burden to their family and friends. It will lead to a breakdown in relationships and could cause financial issues. 0.5% of the United Kingdom’s adult people are problem gamblers, and 3.1% of gamesters bet over and above they have enough money to drop (Lilly, 2020). marketing论文代写
In this situation, it can be imagined that some of these adults have families to cater to, but due to their gambling addiction, they are unable to carry out their parental duties. In addition to the problem of an increased number of gamblers due to easier access to gambling online, there has also been a reduction in the workforce required in the gambling industries. In September 2019, the gambling industry in total employments 98,174 people thru the UK. This is despondent from 106,000 workers, a conversion-focused on more gambling happening online than on-premises. But from October 2018 to September 2019, online gaming club made £3,190 million in total gross gambling produce that make it the most common game of choice, non-remote gambling made £2,812 million in total gross gambling revenue in the same time, and distant betting made £2,121 million (Lilly, 2020).
It can be observed that even with the fall in employees, betting industries were still able to make a profit.
Apart from the funds gotten through the lottery and other popular betting means, the betting industry is very reliant on the funds received from problem gamblers by providing them with VIP schemes as a form of incentive to encourage them to keep gambling (Davies, 2020).
To control the gambling problem in the UK, the Gambling Act, which was proposed in 2001 by Alan Budd, will need to be reviewed. Over the years, a few changes have occurred in the gambling industry, which has reduced the effectiveness of The Act in regulating gambling. If a solution to these changes is incorporated into The Act, there will be a great improvement in the image of the UK as regards gambling. “New regulation on gambling could contain the overview of required affordability forms or an embargo on the use of credit cards to bet; somewhat the government has said it is seeing” (Davies, 2019). If a 0.1% tax is imposed on the gambling industries as a means to cover up for the damages caused by gambling and is functional to the £14.4bn in profits that gambling businesses made in the newest year, this levy should raise £14.4m.
However, in a monopoly situation, an imposition of the tax would cause an adverse effect to the aim of the tax imposition. The addition of tax will cause the gambling cost to increase, and due to the presence of people who depend on the money gained from gambling to carry out their day to day activities, there will still be high levels of gambling, and revenue will go to the operators rather than the government. marketing论文代写
The possibility of there being a monopoly in the gambling market is, however, unlikely because of the availability of online betting platforms as well as the presence of casinos and arcades.
Therefore, a mandatory taxing system will probably be the most effective method of regulating problem gambling and dealing with its adverse effects. The reviewing of the Gambling Act would have been more effective, but because of the time it would take to review and as well as the adjustment that will need to be made, the gambling industry might have already begun to evolve to new strains and new mediums (Noyes, 2020). If gambling is left to be handled by the free market, the public will be exploited, and there will be a complete breakdown of the market (Reith and Wardle, 2019). Betting industries will continue to engage the public as long as they are acquiring funds, and the gamblers will begin to look for various means to get their hands on more money, including turning to crime. Those who are still unable to get money to pay off their debts may fall into depression which could eventually lead to suicide.
As for their families and friends, they may experience emotional trauma due to the harsh change in behavior of their loved one or even trauma from physical assault by the individual as it has been said that “there is consistent evidence of an association between gambling problems and family violence” (AIFS, 2014). Therefore, the government and concerned organizations must ensure that the problem of gambling is well handled (Noyes, 2020).
According to the information provided above, excessive gambling in the UK has resulted in financial instability for a lot of people, mental health issues including depression for individuals who lose a large portion of their wealth, and the erosion of relations and friendships. One of the most effective strategies that the UK government can adopt in curbing excessive gambling in the UK is by increasing taxes on gambling companies.
One of the main reasons why we are experiencing an increase in more gambling companies is because the business is highly profitable. In the UK, these companies are only charged 15% of their gross profit, but their profit margins are still very high even if this 15% charged to them. This is also the reason why the largest gambling firms in the UK agreed to raise their unpaid tax on gambling revenues from 0.1 to 1%. An increase in the taxes on gross profits would reduce the profitability of these companies, and this means that the market would not be as attractive as it currently is therefore preventing other new gambling firms from venturing into this market. Increasing these taxes by a large margin would also force most of these firms out of the market due to decreased profitability (Davies, 2019).
This strategy is viable in the long run as gambling companies will realize that the market is not sustainable and profitable anymore, resulting in a decrease in the betting rate in the country, which would help reduce the rate of excessive gambling among UK residents. Even though betting companies play some important roles in society, such as sponsoring sports teams and the taxes contributed to the government, we have to look at the bigger picture and forego this by considering how we can reduce the social effects and health effects of this practice among UK residents.
AIFS (2014) The impact of gambling problems on families. AGRC Discussion Paper No. 1.
Davies, R. (2019) Calls for mandatory tax on the gambling industry to treat addiction in the UK. https://www.theguardian.com/society/2019/may/09/calls-formandatory-tax-on-gambling-industry-to-treat-addiction-overhaul-laws-bmj
Davies, R. (2020) Report shows the betting industry’s reliance on problem gamblers. https://www.theguardian.com/society/2020/jan/02/gambling-reportshows-industrys-reliance-on-loss-making-customers
Kenton, W. (2020) Externalities. https://www.investopedia.com/terms/e/externality.asp#:~:text=An%20externality
Lilly, C. (2020) Gambling statistics. https://www.finder.com/uk/gambling-statistics#:~:text=Quick%20overview,47%25%20of%20Brits%20have%20gambled%20in%20sme%20way%20in%20the,over%20%C2%A3135.20%20per%20year
Noyes, J. (2020) Britain’s betting industry is out of control. https://www.theguardian.com/commentisfree/2020/jan/21/britain-betting-industrygambling-act-scandals
Pettinger, T. (2019) Negative Externalities. https://www.economicshelp.org/micro-economic-essays/marketfailure/negativeexternality/
Pettinger, T. (2019) Government Intervention in Markets. https://www.economicshelp.org/microessays/equilibrium/govt-intervention/
Reith, G. & Wardle, H. (2019) Policy action called for to prevent gambling Harm. https://www.lshtm.ac.uk/newsevents/news/2019/policyaction-called-prevent-gambling-harm