Gambling Companies in the UK Facing Up To a Tough Future

3 years ago
Gambling Companies in the UK Facing Up To a Tough Future
27 Feb

One of the world’s most vibrant online gambling territories is facing a crackdown as the UK Gambling Commission gets tough on operators. Games like high stakes online slots are to be banned and advertising could be restricted as the country seeks to address what some are calling an epidemic of addiction.

For decades now the UK has been a fertile ground for online gambling companies, with liberal gaming laws helping to support a sector that generates over £5 billion in gross yield each year. And despite increasing competition and more aggressive taxation since 2015 businesses have continued to thrive with an array of white label casinos as well as hundreds of new slot sites and online bookmakers continuing to establish themselves with relative ease. 

But all that is about to change, and with a new wave of stricter legislation that is expected in the lifetime of the current UK parliament, operators are facing a very uncertain future.

The first big update to come will take effect from April 2020 as a ban on credit cards for depositing to online gambling accounts is introduced. With estimates of between 10% and 25% of all deposits made in this way, revenues will inevitably be squeezed, although it is expected many players will simply switch to alternative payment methods. 

The really big change is likely to come in the form of a new limit placed on the maximum stake for online slots and other casino games. The figure being discussed by the UK Gambling Commission is £2. Currently most games will accept much higher stakes, sometimes as high as £100 or £500 per spin. In 2019 a similar cap was introduced for Fixed Odds Betting Terminals (FOBTs), a regular fixture in high street bookmakers, and often referred to as ‘the crack cocaine of gambling’.  The £2 FOBTs limit led many shops to close down and put a big dent in revenues. A similar cap online could have equally severe consequences.

In fact, in anticipation of this change the value of betting companies has already been drastically affected

Further regulation is expected in the area of VIP and loyalty programs. Those who argue for stricter regulation in the UK say that the proliferation of gambling websites has led to a massive increase in addiction issues. Estimates suggest around 0.7% of the population has a gambling problem, with stories of customers racking up £100,000s in debts appearing in newspapers in recent years. Many addicts say that the big bonuses and rewards constantly given to them by VIP managers worsened their problems and encouraged them to spend far more than they could afford. The Gambling Commission will likely look to outlaw aggressive player management and persuasive tactics that push vulnerable customers too far.

A new Gambling Act in the UK is also expected to address the area of advertising. The gambling boom has been fuelled by billions of pounds spent on advertising across every channel, from TV and online to print. Critics have pointed to a culture in which gambling has been ‘normalised’ as the population sees it everywhere, often tied in with popular sporting events like Premier League soccer and popular TV show sponsorship. The UK Gambling Commission and a Parliamentary committee investigating the social and economic impact of gambling in the UK has also expressed concerns that un-regulated advertising on social media and through search engines, as well as throughout the day on TV, is directly targeting both underage and problem gamblers. To address this, new legislation is likely to curb the way in which operators can promote their brands. 

So there are some big areas of the gambling industry in the UK that will face radical changes in the next five years, with an emphasis on social responsibility. This follows the trend across Europe as we have seen more regulation in countries like Sweden and Germany. In anticipation of measure that will reduce customer spend in the UK already some operators have pulled out of the market. In recent months Royal Panda, owned by Leo Vegas, iRiver Gaming, and smaller sites like Midaur and Ikibu Casino have all closed. With a big squeeze on profits it is expected that many more may follow.

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Writer and semi-retired poker pro from Edinburgh (UK).Read more


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