How Will a New Gambling Act Affect the UK Online Casino Industry?

After many years of unhindered growth the UK online gambling industry is facing a tough future. A cross party group of MPs is seeking to tighten regulation and tackle problem gambling by restricting deposits and stakes and limiting features that encourage fast, high stakes play on games like slots and roulette.

In this article we look at the proposed changes and their likely impact on an increasingly embattled sector.

Online Casino Slots and Roulette

The UK regulator, the Gambling Commission, is currently carrying out consultations to seek opinions from consumers and industry professionals on high value customers and game design. Those who have suffered from gambling addictions have described how special features like Turbo Play and Auto Spin, as well as the ability to play more than one slot simultaneously on one screen, aggravated their compulsion and caused them to spend more money in a shorter space of time.

They have also highlighted irresponsible marketing tactics from online casinos and sportsbooks who aggressively target high value customers with free bets and cashback offers when they lose, in an effort to keep them spending money.

Recommendations from committees in both the House of Lords and the House of Commons have included banning VIP programs entirely and reducing the maximum stake on slots from over £100 to a flat £2. New rules would also remove all turbo and auto functions, as well as animations celebrating wins with less value than the stake.

When news broke of plans to reduce stakes sizes, millions were wiped off the value of betting companies in the UK, and should these additional recommendations be implemented then businesses will take a massive hit. It is widely known that all casinos generate most of their profit from a small number of big spending gamblers, and these proposals would impact those players the most.

Marketing and Advertising on TV and Social Media

Since the 2005 Gambling Act in the UK the industry has enjoyed incredible growth fuelled by liberal legislation, technological advancements and massive advertising spend. Gambling is everywhere in the UK, and in particular advertising is prolific in sport. More than half the teams in the English Premier League are sponsored by casinos or sportsbooks and advertising on TV is intense. And equally online it is hard to get away from banners and text ads offering free bets or free spins on the latest games.

Critics of the industry say that the proliferation of ads has led to the ‘normalisation’ of gambling. A culture in which from a very young age, people in the UK are exposed to gambling without any acknowledgement of the risks involved.

A new Gambling Act will seek to restrict how, when and where gambling firms promote their brands and their offers on TV and online. In particular it has been proposed that Premier League clubs will no longer be permitted to seek sponsorship deals with casinos and sportsbooks, and advertising around games will be banned. Online, social media may no longer be a legal forum in which to place ads either. Furthermore, marketing messages that include free bets and bonuses may be banned entirely.

Measures like these impact both the gambling firms and the marketing agencies who deliver the creative and place the ads. Another marketing sector likely to be affected by a new Gambling Act is affiliates. These are listings websites that review and rate the latest slots sites, sportsbooks and casinos, and refer traffic to them in return for commission fees. MPs are calling for affiliates to be licensed to hold them to account for their messaging and content.

The additional cost of licenses, as well as reduced commissions brought about by reduced profits for gambling firms overall, may put many of these small businesses at risk too.

In Conclusion

It is not clear yet how many of these proposals will be part of the new Gambling Act. What is clear is that new regulation will be brought in during the term of the current parliament, and likely in the next 12 months.

The industry is bracing itself for changes that will impede its ability to generate revenue in the way that it has in the last two decades, and the big firms like GVC and Paddy Power Betfair are already setting their sights on the US market and establishing themselves there in a bid to offset lost profit in the UK in these uncertain times.

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