Economically illiterate nonsense about online gambling

Online gambling is holding the economy back, according to the economic consultancy firm National Economic Research Associates (Nera). In a report commissioned by the Campaign for Fairer Gambling, a lobby group set up by the former casino entrepreneur Derek Webb, Nera claim that the economy would have grown by £1.3 billion a year between 2015-16 and 2022-23 if it weren’t for people gambling online. This news inspired Will Prochaska of the Coalition Against Gambling Ads — another of Mr Webb’s pressure groups — to call on the government to “consider taxing gambling like cigarettes” in order to “reduce consumption”, although how that would work in a business where customers choose how much to spend is unclear.

The general idea is that if people didn’t spend their money on online gambling, they would spend it on things that the authors of the Nera report claim have more “overall economic value”. This, they say, means that “online gambling is detrimental to the British economy”, and from this tendentious conclusion the Campaign for Fairer Gambling suggests that the government should deter people from doing it, which, by a happy coincidence, is what they already wanted.

This is wrong-headed from the start. The point of the economy is to allow individuals to access the goods and services they most want to use. If the government intervenes to make their first preference too expensive, too inconvenient or too illegal, he or she will have to settle for second best. In so doing, the government is imposing an economic cost on that person. The idea of using state coercion to make people spend money on things they don’t really want for the good of the economy (“Buy British!”) is silly. 

Claims about certain industries having bigger multiplier effects than others are usually dubious and self-serving, but they are particularly suspect in the Nera report because the authors define an economically productive industry as one that is “labour intensive”, which is to say that it has to employ more people to generate the same amount of revenue.

 

Read the rest at The Critic.