VoxEU Column Taxation

Taxing gambling: Some precedents

There is increasing public concern about gambling, and the UK government recently established a Gambling Commission. This column examines England’s historical experience with regulating and taxing gambling to draw lessons for the present.

Today, the notion that Britain is in danger of becoming, or has become, a ”nation of gamblers” is commonplace. In fact, the chairman of the UK government’s recently established Gambling Commission has said that “we are a nation of gamblers”. Three hundred years ago, commentators were saying much the same thing. By the late seventeenth century, gaming was so rife that 1.2 million packs of playing cards were produced in 1684 alone – one for every five people living in England.1 The social and economic context may have been different then, but some of the issues look rather familiar, so it is worth revisiting how eighteenth-century legislators approached the problem of gambling.

Taxing gambling

From at least the middle of the sixteenth century, a small tax had been levied on playing cards made in England. But since a third of it went into the pockets of the tax collectors, the government made very little money from gaming. The number of packs of playing cards produced in England increased tenfold during the course of the seventeenth century, something that cannot have gone unnoticed by a government hungry for funds, due to costly wars and economic strife in the 1680s and 1690s. Given that playing card production was centred in London and that cards were used for recreation rather than sustenance, it probably came as no surprise when, in 1710, stamp duty was extended to cards and dice. But few could have expected that this would increase the tax levied on each pack of cards by a massive 2300 percent! There were two immediate results: playing card production was halved and cases of tax fraud rocketed.
From 11 June 1711, every pack of playing cards produced in England had to be stamped by a government official to show that the tax had been paid; otherwise, they could not be sold legally. It was not long before forgers realised that they could profit from making counterfeit stamps, but the stakes were high. In 1743 Thomas Hill forged government stamps on over 3,000 packs of cards. This was not an amateur operation and Hill had even set up a workshop with his accomplice, Richard Tustian. But Tustian was caught, and he betrayed Hill to the authorities to save himself from prosecution. This was the end for Hill; he was tried at the Old Bailey, found guilty, and sentenced to death. Penalties were harsh because counterfeiting an official stamp not only deprived the government of much-needed revenue but also undermined the authority of the state.

One might have expected the stamp duty to have substantially reduced legal playing card production and thus the potential revenue that could be raised from gaming. In fact, this was not the case: the tax increase was so great that by stamping only 400,000 packs of cards per year – a third of the number that were produced in 1684 – the government still stood to generate eight times more revenue than it had before the imposition of stamp duty.

Policing gaming

The financial motives for taxing cards and dice heavily are fairly obvious. But we can also look at this as a story of social control and an attempt to price the poor out of gambling. In the seventeenth and eighteenth centuries, large sections of the population – including servants, labourers and the poor in general – were prohibited by law from playing cards, dice, and other games for money. But England did not have a professional police force at this time, and the laws were enforced by unpaid parish constables and magistrates. In these circumstances, suppressing gaming proved to be difficult.

Specialised gaming houses, which developed in England in the early eighteenth century (but had existed in Venice for much longer), posed a particular problem to the authorities. Organised along the lines of modern casinos, with multiple gaming tables and different levels of management, these gaming houses were seen as propagating and profiting from illegal gaming. It was also believed, often with good reason, that they harboured highwaymen and other criminals; gaming was a way in which stolen ‘bank bills’ and money could be laundered. Organised gaming houses therefore became a focal point for concerns about crime and vice. There were high-profile raids on notorious gaming houses, but these could be dangerous; in 1721, a riot broke out in Covent Garden when constables tried to arrest a group of gamesters. On other occasions, officials and juries were paid off by owners of gaming houses. Most of the time, there was not enough manpower to enforce the anti-gaming laws effectively.

Another approach was needed, and as one government adviser suggested, raising the price of playing cards would stop “the immoderate use of gaming especially amongst the ordinary and meaner sorte of people”. He was not the only one with this viewpoint. In 1710, the members of the Company of Makers of Playing Cards and other associated trade groups petitioned strongly against stamp duty on the grounds that it would cripple their businesses. They pointed out with some alarm that play among the ‘common sort’ would be much reduced, while those ‘who chanced many pounds at a game’ would be able to afford to carry on as normal. Given the difficulties of policing gaming, this may have been exactly the point.

Taking a gamble on tax

What can we draw out from this? In the seventeenth and eighteenth centuries gaming houses were illegal, so the government could not tax gaming through a system of licensing. The legislators would have balked at the thought of legalising gaming houses, for, in addition to the issues of crime and vice already mentioned, they did not wish to encourage gaming among the poor. This meant that there was no way of taxing the turnover from gaming.

Although there were instances of French ships illegally selling playing cards off the English coast, eighteenth-century lawmakers did not really face the problem of gaming operators moving offshore. Not so today. The British government’s policy of regulating, rather than restricting, remote gambling has made Britain one of the largest legal European markets for online gambling. Yet many of the companies profiting from the UK market are based in jurisdictions with much more favourable tax regimes, such as Gibraltar. Britain may have shelved its plans for a supercasino earlier this year, but there are already over 140 casinos in the UK, in which some £4.3 billion was exchanged for gaming chips in 2006/072. Charging stamp duty on cards and dice at their point of origin was an eighteenth-century method of making gaming tangible for tax purposes; licensing and taxing ”onshore” casinos may be viewed in a similar way.

The proliferation of elite gaming clubs was largely responsible for late eighteenth century Britain being described as “one vast casino”.3 But gaming among politicians and aristocrats, while criticised, was not as much of a concern as gaming among the poor. As the magistrate and novelist Henry Fielding put it in 1749, “to prevent Gaming among the lower Sort of People is principally the Business of Society … because they are the most useful Members of the Society; which by such means will lose the benefit of their Labour”. The consequence of gambling for the “Rich and Great”, thought Fielding, was “generally no other than the Exchange of Property from the Hands of a Fool into those of a Sharper, who is, perhaps, the more worthy of the two to enjoy it”.4 Charging stamp duty on cards and dice did not solve the problem of gaming, but it was an innovative approach by the standards of its time. We may not agree with the motivation of the eighteenth-century legislators, but surely there is a lesson to be learned from their attempt to strike a balance between raising revenue and reducing gaming among those who could least afford to lose their money.


1 All seventeenth- and eighteenth-century gaming statistics are from Nicholas Tosney, ‘Gaming in England, c. 1540-1760’ (PhD thesis, University of York, UK, 2008).
2 The Gambling Commission, ‘Supplementary Information on the Casino Industry’ (Nov. 2007).
3 G. O. Trevelyan, The Early History of Charles James Fox (Kessinger Publishing, 2003 [London, 1881]), p. 77.
4 Henry Fielding, A Charge Delivered to the Grand Jury at the Sessions of the Peace held for the City and Liberty of Westminster, in G.  Lamoine (ed.), Charges to the Grand Jury 1689-1803, Camden Fourth Series, vol. 43 (The Royal Historical Society, 1992), p. 340.



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