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 ‘voluntary taxation’ 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 (Schüll 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 ‘responsible gambling’ 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 ‘good causes’ 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 it—traditional raffles in churches and workers’ 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 country’s welfare by taxation and licence/concession fees, and they also sometimes support ‘good causes’ 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
Full size table

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 profits raised by private (licensed) operators are used by governments for designated purposes. The purposes and the recipients of these funds are diverse. In Slovenia and France, local municipalities receive funds from the casino industry to develop their tourism infrastructure (Besednjak Valič and Macur; Marionneau and Berret, this volume). The National Lottery in Britain (operated currently by the Canadian-owned private company Camelot) distributes its revenues, among other causes, to sports and culture via the Heritage fund (Orford, this volume). However, contributions to these ‘good causes’ are decreasing (UK Gambling Commission 2018) while private profits are increasing relative to each other (Neate 2017), possibly due to market cannibalisation (cf. Marionneau and Nikkinen 2018). 2 In Italy, licensed gambling operators are obliged to use part of their profits to support charitable organisations, but the choice of the cause is at their own discretion (Rolando and Scavarda, this volume). Direct involvement in gambling operation by non-profit actors and charity organisations is not common in Europe, but there are some examples. In Iceland, the University of Iceland Lottery raises revenue for this institution (Gidluck, this volume), while in Spain, the ONCE lottery raises funds for the blind (Becoña and Becoña, this volume). Bingo has traditionally been a way for small charitable organisations to collect funds for their activities (Casey, this volume). In Sweden, public interest non-profit organisations have also enjoyed a tax exemption for their gambling operation, but this might be a stumbling block in view of EU regulations (Cisneros and Hettne, this volume).

These different arrangements have their advantages and disadvantages. Direct industry contributions tend to serve as a marketing tool for the gambling business, and closely tie the beneficiaries to gambling providers (Adams 2016; Rolando and Scavarda, this volume). Corporate power may also have a negative influence on public health and wellbeing if industries are not efficiently regulated (Freudenberg 2016; Orford, this volume), and corruption among public officials in relation to gambling has also been documented in countries such as the US (Walker and Calcagno 2013) and Poland (Wieczorek and Bujalski, this volume). Government-brokered contributions (Adams 2008) are meant to avoid such direct connections between the industry and its beneficiaries, but strong state involvement gives the state a problematic double role as both a regulator and a beneficiary (Marionneau and Berret, this volume; also Australian Productivity Commission 1999), while channelling gambling funds to CSOs through the state reduces the independence of these organisations (Egerer et al. forthcoming). Different types of beneficiaries therefore have strong financial and political interest in gambling revenue, or ‘addiction surplus’ (Adams and Livingstone 2015; Adams 2016), often at the expense of social and equality concerns (Nikkinen and Marionneau 2014). According to a study financed by the European Research Council (Cassidy et al. 2014), governments and funding bodies steer gambling research towards ‘safe’ channels as far as they and industry actors are concerned.

There is a clear need for studies focusing on these systems of redistribution, the part that gambling plays in funding welfare provision, how the systems are regulated, and the pros and cons of different ways of collecting public revenue from gambling and redirecting it back to welfare projects. The aim in this book is to narrow this research gap.

The focus in the first section of the book is on case studies in which the majority of gambling revenue is directed to state-run welfare. This means allocating funds to state treasuries or other administrative actors and stakeholders. This approach appears to be particularly popular in larger, highly centralised European countries such as France and Italy. In their contribution, Marionneau and Berret exemplify the actor network and the interests involved in the French system, in which the state is not only the main beneficiary of gambling but also actively consolidates its position at the expense of other beneficiaries. This situation raises questions not only about the multiple roles of the state as a provider, regulator and beneficiary of gambling, but also about the democratic process of redistributing the proceeds (Adams 2008, 2016; Orford 2011). Rolando and Scavarda consider the consequences of the rapid expansion of the gambling offer and the scattered field of its regulation in Italy. Based on key-informant interviews with local gambling scholars and other stakeholders, they consider the positions of beneficiaries and industry actors. The Italian case exemplifies the problems associated with using gambling to generate public funds without adequate industry control. Bereiter and Storr discuss how funding State Treasury needs from gambling proceeds in Austria remains questionable in light of the decisions of the Court of Justice of the European Union (CJEU). The monopolistic Austrian providers follow an expansionist policy in which consumer-protection concerns seem to appear only on paper. Finally, Becona and Becona give an overview of the manifold ways in which gambling revenue is redirected to welfare expenditure in Spain. Spanish gambling provision is driven by arguments related to enhancing tourism, the aim being to collect revenue for the State Treasury while externalising possible harm. The wide range of gambling products across the country has nevertheless not delivered on these promises: gambling problems have also increased in the Spanish population, whereas the conflicting interest in gambling revenues has created tensions between central and regional governments.

The focus in the second section of the book is on cases in which gambling revenue is used to fund designated causes. In the German case, Loer gives an example of how charity beneficiaries become heavily involved in and dependent on gambling funds and operations to the point of blocking more effective gambling policies. The ‘coalitional equilibrium’ between actors in Germany has stabilised the offer of gambling between two poles: the privately run EGM market outside of casinos, and a state monopoly on lotteries, leaving little room for outside actors such as online providers to enter the market legally. Besednjak Valič and Marcur similarly show in the chapter describing the channelling of gambling revenue in Slovenia how municipalities have become dependent on casino profits, particularly in the region bordering Italy. In addition, and similarly to the German case, financial interest in channelling funds to earmarked causes, including sports and the disabled, has taken precedence over consumer-protection concerns.

Given the different ways of regulating gambling sectors, some specific game types appear more likely to contribute to earmarked causes than others. Although privately operated casino and EGM markets tend to contribute more to taxation, European lotteries are typically in state hands. As Gidluck’s comparative overview of European lottery regulations and models of redistributing lottery funds shows, the main earmarked causes funded from lottery revenue include sport, charities, culture and science. However, earmarking funds creates dependence on this source of income, and good causes may also function as a smokescreen or a PR tool for lottery providers. Bingo is an example of an institutional arrangement by means of which charities directly operate gambling. Casey’s contribution focusing on the use of online bingo as a fundraising mechanism for charities in European markets shows how these charities create a ‘halo effect’ for what in practice resembles commercial gambling and a digital business enterprise.

The third section of the book concerns regulatory changes. The CJEU ruled that the sole justification for acquiring funds for state-welfare or charitable causes via gambling cannot be to intervene in this market (di Verona 1999). Restrictions on national gambling markets must therefore be justified with reference to crime prevention, consumer protection or the prevention of problem gambling. The Court of Justice of the European Free Trade Association (EFTA) gives similar reasoning (Ladbrokes 2006). The CJEU is nevertheless also tolerant of justification on historical and moral grounds, often including a component of financial benefit for the public, as long as national regulators in Europe do not refer to their financial benefit directly (Haltern 2016). However, the importance of European institutions in moulding national gambling legislation should not be exaggerated (see also the concluding chapter of this book), given that similar arguments can be used to justify both liberalisation and restriction in the market (Marionneau 2015; Euchner et al. 2013). In any case, regulatory changes seem to stem from national needs rather than pressure from the European Commission or the CJEU. Furthermore, the European Commission announced in December 2017 that it would no longer initiate infringement procedures or deal with complaints in the area of gambling, leaving legal control to the discretion of national legislators (European Commission 2017).

In her case study on Norway, Borch discusses the justifications used in the monopolisation process of the Norwegian EGM market in 2007. Using key-informant interviews, she shows how the process was justified in terms of consumer protection, but also served the financial interests of the state and the charity associations that would benefit the most. Cisneros Örnberg and Hettne give an overview of current changes in Swedish gambling regulation, and of their compatibility with EU requirements. Sweden is in the process of opening its strong state-monopoly system of online gambling and sports betting to licensed markets, but the different statuses of the beneficiaries in both the new and the existing sectors may complicate the process of justifying the legislative change to the EU. Another case of legislative change is exemplified in Wieczorek and Bujalsksi’s contribution from Poland, where a major political corruption scandal in 2009 put gambling in the spotlight and turned public opinion against EGMs in particular. This resulted in the imposition of several restrictions and, similarly to the case in Norway, the later monopolisation of the market, making the state rather than private operators the main beneficiary.

In the fourth and final section of the book, we introduce theoretical perspectives on whether gambling can be compatible with the idea of welfare. Orford uses the example of Britain to demonstrate how the liberalisation of the gambling market was driven by economical reasoning and marked by a lack of a public health perspective. Despite critical public attitudes, the state continues to support the privatisation of the gambling market, although fixed-odds betting terminals are increasingly under governmental scrutiny due to their negative impact on gamblers and communities in Britain. Orford asks whether the promotion of gambling is in line with the idea of a ‘good society’. Järvinen-Tassopoulos and Eräsaari discuss the concept of the ‘common good’ and its use in making gambling policies more democratic and solidary. Unlike the fiscally motivated public good, understood as providing funding for public projects, the common good is understood as a moral concept that could be used to highlight social concerns over financial interests. Sulkunen advances a similar argument, claiming that gambling policies should be based not on a requirement for causal evidence, but on advancing the ‘public interest’. The author shows how seemingly similar concepts, such as the common or public good, and the common and public interest have very different connotations in reality. According to Sulkunen, from a policy perspective, the public interest is the most appropriate conceptual tool for drawing up sustainable gambling policies that advance the wellbeing of populations rather than focusing on fiscal gain.

In the conclusion, we summarise the main findings of the chapters by discussing three contradictions regarding the relationship between gambling and European welfare states. First, justifications and motivations for gambling policies seem to differ. Although charitable causes and welfare projects funded by gambling cannot be offered to European institutions as justifications, they also do serve as smokescreens for public and private profit-making in local contexts. Beyond these legal and political discourses, the real motivators of gambling legislation or regulatory inaction often appear to be vested interests in gambling revenue. Second, gambling may be regulated in a number of different ways, as exemplified in the contributions to this book. However, more restrictive regulations are not necessarily always the best policy option in terms of preventing gambling harms, particularly if these harms are not understood in the wide sense that goes beyond problem gambling and also includes societal and systemic problems. More efficient regulation can only be accomplished by better defining the role governments should take between a provider, regulator and beneficiary of gambling. Third, the fact that financial interest tend to take precedence over harm prevention challenges the idea that gambling could be in line with the idea of welfare ethically or even financially, as gambling creates a cycle in which the same revenue is only circulated between the same stakeholders. Finally, we discuss the implications of these contradictions and the different institutional arrangements through which gambling and welfare provision have become intertwined across Europe.

FormalPara Notes
  1. 1.

    In the state of Tasmania in Australia, the clubs obtain 0.9 per cent of the gambling machine revenue, whilst a Sydney-based family (which is the sole license holder in Tasmania for gambling machines) keeps 47.8 per cent. This is 53 times more than Tasmanian clubs obtain (Livingstone 2018, see also Boyce 2017).

  2. 2.

    Total contributions to ‘good causes’ were approx. 1.5 billion GBP in the UK between April 2016 and March 2017 via the National Lottery, a decrease of 16.9% compared to the previous fiscal year (Gambling Commission 2018). The profits of one British gambling company alone, Bet365, were 514 million GBP in the same period, with a rise of 15 per cent compared to the previous fiscal year. The CEO of the company paid herself 217 million GBP as a salary and dividend payments, being the highest-paid CEO in the UK. The amount is 22 times to what the whole gambling industry contributes annually to treatment in Britain (Neate 2017).