Stricter Regulation Likely to Reduce UK Gambling Industry Revenues
Reform of the UK gambling industry has been promised but delayed for many years. Movement is finally being made on this subject and it is not good news for the revenues of new online casinos.
Last year, the Conservative government published a White Paper on gambling reform. Many of its suggested measures to be introduced concerned online casinos. September 2024 was to see the introduction of much-reduced maximum stake limits for online slot games. This was delayed after Labour won the July General Election. Now it’s been announced the new stake limits will be enforced in 2025.
There is a great deal of concern about the suffering of gambling harm by younger players. Trying to get wins on slot games is one major area of concern. The government believes they are “high risk” products and a great deal of money can be lost in a short period of time.
The charity GamCare has revealed that in the 2023-24 period, 45 percent of those who called the National Gambling Helpline spoke about the difficulties online slots had caused them. That was a rise of 11 percent from the previous figures for 2020-21.
The NHS say that they have seen a huge increase in the number of people being referred to them after suffering gambling harm. This comes at a time when the NHS is facing increasing problems and has already been described by the new government as being “broken.”
The new measures will see players aged 18-24 only being able to stake a maximum of £2 on each spin of the reels. If a player is aged at least 25 years old, the new maximum stake limit will be £5 a spin.
Some campaigners would prefer to see the £2 maximum stake limit apply to gamblers of all ages. That was the figure set for the fixed odds machines seen in High Street bookmakers after they’d been heavily criticised for the heavy losses players were making when using them. That reduction led to a loss of revenue, some shop closures and redundancies.
Figures released by the UK Gambling Commission for the period June to September 2024 revealed just how important online slots are to the industry. The gross gaming yield for online slots was £680 million, a 16 percent increase when comparing that amount with the same period in 2023. The new stake limits are expected to see a reduction in the online slot revenue figures and that is not good news for the UK gambling industry.
Another big problem for the industry is the new compulsory levy that gambling companies will have to make. This is another proposal that was included in the White Paper published last year. The expectation is that the levy will raise £100 million in funds. This will be used to fund addiction treatment programmes.
The Betting and Gaming Council have reacted to the news of the compulsory levy by mentioning the voluntary amounts that are made. UK gambling companies have already contributed £50 million this year and £170 million over the past four.
However, the proposed £100 million a year is far higher and will again affect the revenues of UK gambling companies. The government accepts that voluntary contributions are being made. Their argument is that some companies don’t pay their fair share. Some only pay just £1 a year so action is required.
The amount that will have to be paid will be dependent on a number of factors. It is expected to be between 0.1 percent and 1.1% of GGY plus also the risk profile of what services they offer. While the BGC accepts that reform is needed, their concern is that the government has “lost their perspective.” The fear is that Labour are being influenced too much by anti-gambling campaigners and add that the latest figures show only 0.4 percent of adult gamblers have a problem and responsible gaming is carried out by others.
The changes come at a time when the UK gambling industry continues to expand. 2024 has seen new gambling operators enter the market. Doing so is a difficult task as the UK market is already a highly congested one and it’s difficult to secure an acceptable market share.
Betano, who are one of Kaizen Gaming’s main brands, entered the UK gambling market this year. One way in which new companies can gain awareness of their product is via sponsorship. Betano are now the principal gambling sponsors of Aston Villa.
There is also plenty of criticism about such sponsorship deals. The English Premier League have agreed a voluntary ban on front-of-shirt sponsorship by gambling sites. This isn’t scheduled to come into force until the end of the 2025-26 season.
Another new online gambling site is EasyBet who specialise in sports betting. Their new site has been formed in partnership with established betting exchange company Matchbook. Now the two new companies find themselves in a UK gambling industry that is facing stricter regulation.