The impact of Gambling on Government Budget: A European Comparison with a Focus on Italy

During the last decade most of the European countries started a process of liberalization of gambling with the aim of fighting against illegal gambling and collecting an increasing amount of tax revenues. In this paper, after providing a comparison on main gambling institutional and tax differences across a selection of European countries, we evaluate the impact of gambling on government budget in order to understand if gambling consumption cannibalizes other forms of consumption, making doubtful the net effect for the government revenues. Results of our empirical analysis show that the effect of gambling on state balance is very small and, in some cases, not significant. Considering also the relevant social costs connected to pathological gambling, this result is interesting for policy makers who often consider gambling revenues as a possible alternative source of tax revenues.