How Does Online Gambling Affect Different Economies?

We all know that the economy is always changing – trends and spending habits are rarely consistent, but how do recreational activities affect the economy around the world?

Did you know that global gambling statistics suggest that Americans spend about 3% of their disposable income on gambling? How about Australians spending a good 3.55% of their income on gambling (even though gambling is not as accessible there) or the British spending 1.43% of their income on gambling? This applies to both online and offline gambling.

These are pretty hefty figures, and as you can imagine, this has a positive impact on the various economies. Let’s tell you how:

Taxes

Casinos are profitable enterprises. It’s tough to make a loss when you run a casino. The saying: ‘The house always wins’ is true. Sports betting platforms are just as profitable. Assuming the odds are calculated correctly, a platform should always make money, no matter the outcome of the event.

When an online casino makes a profit, it pays tax on those profits. Those taxes are filtered into government expenditure. Government expenditure then feeds the economy.

You should also remember that casinos in the major gambling countries need to be licensed. There may be additional taxes associated with running an online casino, which means more cash for the economy. Some local governments derive a good chunk of their resources from casinos that operate in their area. Take Malta, for instance – a number of online casinos choose to base their headquarters there, and Malta is benefitting massively.

When A Country Requires The Licensing Of Platforms

Many countries require licensing for platforms that offer services to their citizens. This has a couple of benefits. The one people talk about the most is the protection of customers. We suppose this is the main purpose of licensing gambling. It ensures that everything is fair, and no customer is taken advantage of. However, there are benefits beyond this.

If a government requires all platforms to be licensed to operate within their country, it means any money spent on those platforms stays within the country, often boosting the local economy. Take the UK, for instance – all casinos operating within the country are licensed there, and money is fed back into the country. These casinos also create jobs within the country, which is fantastic for the economy.

In the case of Canada and New Zealand, while there are site licensing systems in place, neither requires a platform to be licensed if it is based outside of their country. This means that money spent on those unlicensed casinos is heading out of both Canada and New Zealand, which isn’t great. Although, we must admit that both locations are working hard to close these loopholes.

Job Generation

In the United States, it is said that the online gambling industry has created about 1.8 million jobs. Since the industry is growing steadily, the number of available jobs will continue to rise. Many of these jobs are located within the country (although some sites may outsource certain operations). Other countries won’t have the same number of jobs created as the United States, but we wouldn’t be surprised if hundreds of thousands of people are, in part, getting at least some of their income by working closely with online gambling platforms.

These are just a few of the fields that work in online gambling:

–       Tech support.

–       Customer support.

–       Programmers.

–       Designers (for games and websites).

–       Advertising.

–       Legal (particularly important with online gambling).

–       Accounting.

You then have all the services associated with online gambling. So, jobs are created in payment processing, running web servers etc.

In some countries, a lot of income in the gambling industry comes not only from online gambling platforms but from the games developed for them. The developers get a small amount of this money. Consider the UK and Sweden, for example. If you’re looking at a big casino game developer, then chances are that their games will have been developed in one of these two countries. However, we are starting to see a few developers move their operations to other countries too. We wouldn’t be surprised if the USA had a highly competitive game development scene in the coming years.

The Negative Side Of Online Gambling On The Economy

In the interests of fairness, we do want to point out that some people believe that there is a negative side to online gambling. Not because of potential addiction, though. Some people argue that the money spent on gambling (and it can be a reasonable chunk of a person’s available income) can be put to better use in more productive ways. We agree. However, you should also bear in mind that the money being spent on online gambling is being fed into the economy. It is also paying the salaries of people operating in the online gambling sector. This money will eventually be spent in more productive ways too.

A report from The Guardian in the UK suggested that online gambling in the UK is costing the economy one billion pounds per year. This is because the increase in online gambling is moving money away from more productive sectors. As a result, some industry analysts are proposing that taxes be raised on online gambling to counter this. However, it is unlikely that this will ever happen. The same analysts suggested that over-promoting online gambling was also taking money away from the economy, as it was leading to rapid growth in the sector.

As we mentioned before, some countries also make it a little too easy to move the money spent on gambling there out of the country. This can hurt a country, since you don’t want to move money out of the economy if you can avoid it. This does seem to be more of an issue with Asian casinos, however.

Final Thoughts

For the most part, online gambling has a huge impact on the economy, generating significant tax revenue, creating jobs and contributing to economic growth. However, like any industry, it does come with its challenges. The key to maximizing its benefits lies in balancing regulation, protecting consumers and ensuring that money spent on gambling stays within the local economy.