Gambling regulations in the EU are not a ‘one size fits all’ situation. Some countries are pretty lenient with their laws and allow for a range of games of chance. Others, on the other hand, take a hard stance on the matter, allowing a select number of games. While the region is mostly a single state when it comes to economic significance, different countries have to pass gambling laws that work best for them. As such, there is no standardization on rules, and players must understand what applies to them.
Many EU countries have opened up to giving more than one operator a license to operate in the region. That allows for more players to enter the markets and allows a variation in available games for the consumers. Let us look at how the legalization of gambling in these countries has affected the economies:
It is no secret that the gambling industry is worth billions of Euros, and everyone seems to be angling at a chance at the lion’s share. Both players and operators understand that if they play their cards right, they can reap quite a lot from this industry. Governments, too, can make a killing from this industry by introducing mechanisms through which they can collect a lot of revenue. One such means is through taxing operators in the country. As they work on providing these services to consumers, they can set aside a chunk of their profits to the benefit of the government.
Many states have seen the beauty of this approach and adopted it with ease. The other way is by getting involved in the provision of gambling services, such as monitoring the lottery. Take an example of the national lottery which takes place in the United Kingdom. The winner walks away with a lump sum that is free of taxes. Behind the scenes, 25% of the cash goes to activities deemed fit by the parliament. Another 12% goes to the government as the lottery duty, and 4% ends up as commission to retailers. That is a form of the government having a say as to where the money goes and benefiting from wagers taking place in its jurisdiction.
The money that accrues from taxing betting operators often goes into improving public services. You have to remember that the government is in place to cater to the needs of the people. That means that most of this cash ends up in social security, education and health sectors, which are the most demanding. You will find that most countries are okay with gambling, as long as it positively contributes to the expansion of these sectors. Sometimes, the state may okay such a move if the proceeds work in helping the disadvantaged in the society. An example would be where people play bingo for charity.
The money will not necessarily always go into improving the livelihoods of the citizens. In some cases, the government may tax operators and players for other reasons. It could be that it wants to avoid raising taxes on other sectors and thus relies on gambling as an alternative source of income. The state could also use the money to maintain existing services or reduce the national debt.
Note that where gambling regulations are not adequate, the effect on public services could be the opposite. Think of a situation where many people engage in irresponsible wagering and lose their savings or engage in activities that threaten their health. In this case, there would be high pressure on existing public health services, such that the system would suffer an adverse impact. As much as a government wants to raise money from this industry, it must also strike a balance between the two extremes.
Monitoring an entire industry is not a small fete, and governments have to rely on added resources to be efficient in this oversight. That results in added costs which could be problematic in the long term. These costs can especially be high where the state has direct involvement in the provision of such services. The state must thus be sure that the monitoring will bear fruit, rather than take away from revenues resulting from other sectors.
When most gambling operators set up shop, they do so with the intent to keep customers increasing by the day. They thus include other amenities such as hotels and entertainment centres to increase their appeal. This move can have varying effects on the surrounding communities. On the one hand, it can create competition such that the existing providers get phased out after a while. On the other hand, the effect could be positive such that more businesses set up to complement the new establishment. It could go both ways, based on the kinds of incentives the government provides to gambling operators.
This industry also has an impact on infrastructural development, property values and income growth, among other economic aspects. How it affects them boils down to the measures put in place by the government to protect its citizens as a whole.