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Taxation and the Demand for Gambling: New Evidence from the United Kingdom

  • David Paton

    (Business School, University of Nottingham, UK)

  • Donald S. Siegel


    (Department of Economics, Rensselaer Polytechnic Institute, Troy NY 12180-3590, USA)

  • Leighton Vaughan Williams

    (Department of Economics and Finance, Nottingham Trent University, UK)

In October 2001, the U.K. government implemented a dramatic shift in the taxation of gambling, resulting in a substantial decline in taxes levied on U.K. bookmakers. Using data before and after this event, we present econometric evidence on the demand response to this tax reduction. Our results suggest that the demand for bookmaker gambling is highly sensitive to taxation rates and that the decline in the rate of taxation led to a large increase in the demand for on-shore betting. We also find some evidence of price-induced substitution across different segments of the gambling industry. The U.K. policy initiative may provide useful information for policy makers in other countries who are contemplating changes in gambling taxation.

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Paper provided by Rensselaer Polytechnic Institute, Department of Economics in its series Rensselaer Working Papers in Economics with number 0306.

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Date of creation: Oct 2003
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Handle: RePEc:rpi:rpiwpe:0306
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  1. Gary C. Anders & Donald Siegel & Munther Yacoub, 1998. "Does Indian Casino Gambling Reduce State Revenues? Evidence From Arizona," Contemporary Economic Policy, Western Economic Association International, vol. 16(3), pages 347-355, 07.
  2. David Forrest & O. David Gulley & Robert Simmons, 2000. "Testing for rational expectations in the UK National Lottery," Applied Economics, Taylor & Francis Journals, vol. 32(3), pages 315-326.
  3. David Paton & Donald S. Siegel & Leighton Vaughan Williams, 2001. "Gambling Taxation: A Comment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 34(4), pages 437-440.
  4. David Paton & Donald S. Siegel & Leighton Vaughan Williams, 2002. "A Policy Response To The E--Commerce Revolution: The Case Of Betting Taxation In The UK," Economic Journal, Royal Economic Society, vol. 112(480), pages F296-F314, June.
  5. Forrest, David & Gulley, O. David & Simmons, Robert, 2000. "Elasticity of Demand for UK National Lottery Tickets," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 853-64, December.
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