Gambling is now a large revenue source for many governments due to its ease of implementation, popular appeal and the high real tax rate it can bear (up to 40%). It is often promoted by spending on 'good causes' designated as 'additional' to existing government activity. This article examines the UK's National Lottery and Electronic Gaming Machines (EGMs) in Queensland, Australia and shows that, in both cases, gambling taxes are often diverted into education, health and social and economic development and therefore potentially substitute for taxation raised elsewhere in the economy. In addition, there is evidence that gambling's taxation implications (against income) are doubly regressive, taking disproportionately from lower income groups and giving to those better off.

Gambling in Queensland: government revenue and regulation (Research bulletin, no. 5/97)