On several occasions it has been claimed that Italy loses out with gambling. Senator Endrizzi announced last September: “According to a study of the University of Neuchâtel in Italy social and health costs for gambling would amount to about 6 billion”. He continued: “The State loses about 3.8 billion of VAT revenues because of missing consumer expenses”. He applies VAT, then at 21%, to 2012’s gambling spending, equal to 18 billion. It’s now time to put the record straight.
On 2012 the University of Neuchâtel carried out a study on social costs of gambling in Switzerland, not in Italy. Data used by Endrizzi are provided by Conagga, which projected Swiss results on Italy, on the basis of the ratio between estimates of pathological gamblers in the two Countries. Conagga forgets that the Italian GDP per-capita is equal only to 42% of the Swiss one. Costs should have been calculated by comparison with the different income per-capita.
The Swiss research, in its introduction, mentions other studies that adopt different models and estimates social costs as being much lower. The Swiss researchers do not attach the other studies. They offer their model and estimates with prudence and acknowledge others may have different opinions.
The Swiss study identifies three types of cost: “direct cost”, i.e. medical costs (equal to 1.3%), “indirect cost”, for poorer work performance (equal to 69.7%) and the “human costs”, for loss of quality of life (equal to 29 %).
With regard to indirect cost the Swiss study finds that, on equal terms with reference to gender, age, education, Swiss vs foreign nationality, employee vs independent status, work performance of pathological gamblers is lower. The research assumes that pathological gambling is the antecedent cause of the weaker work performance. But there is no proof gambling is the cause and not the effect. There is a kind of comorbidity between pathological gambling and poorer work performance, but we do not know the way of this relationship. In the report on which Conagga shows social costs it accuses gambling of being responsible to push especially people in weaker economic conditions, like jobless, towards pathological behavior. First it claims that poorer work performance is due to pathological gambling and then it endorses the Swiss research and says the opposite.
Furthermore the Swiss research quantifies the impaired quality of life of the pathological gambler and of family members. It is an estimation based on heavy quantitative and methodological assumptions, which in fact the Swiss research openly shows. Against the recovery of quality of life of pathological gamblers (0.8% in Italy, according to Conagga) it should be taken into account the loss of quality of life of 99.2 % of citizens who would be forced to give up a healthy and legitimate gambling activity and would suffer a limitation of freedom if the ban of gambling claimed by Endrizzi had been adopted. Not to mention the fact that pathological gamblers, for whom the game is an addiction, i.e. an overwhelming need, will address to the illegal offering.
Finally, these costs do not burden on the State budget. If they cease do not become State’s income and do not replace at all taxes paid by concessionaires.
Endrizzi’s claim is weak and inconsistent also on VAT. He assumes the amounts taken from legal gambling would be spent only for goods and services with the highest VAT rate. He should adopt instead a mix of the three different rates, 4%, 10%, 22%.
Furthermore the senator forgets that although gambling is VAT exempt, goods and services operators buy to produce gambling are not. For these goods and services the final consumer is the gambling supply-chain operator, which is subject to VAT and cannot deduct it. VAT is a cost to the gambling operator. Apart from the personnel, VAT charges all production costs, almost exclusively at 22%. The State cash-in, and perhaps it would loose out on VAT without gambling.
In conclusion, the statement the State loses because of social costs and because of less VAT income more than it cash-in for legal gambling taxation is wrong and irresponsible.
