2018 will probably be remembered as a dramatic year for the UK gambling industry with the changes in regulations that are affecting both players and gambling business. The online gambling sector is trying to survive after the government have decided to do a proper crackdown with the aim of setting new standards for both land-based and online operators.
As reported by The Guardian back in 2017 misleading advertising done by operators and affiliates was a raising concern. On the back of that the Committee of Advertising Practices in the UK (also known as CAP) have suggested a new set of regulations aimed at the marketing of gambling services and products.
The target is to have a much better level of customer protection and to fight the growing problem with gambling addiction. Shocking stats from a research carried out by the UKGC revealed that as many as 2 million UK citizens were affected by a pathological gambling problem or were at very high risk of addiction.
Betting Companies asked to comply with much stricter advertising rules
The UK Gambling Commission have threatened to give heavy fines or even revoke the license if operators or their affiliates will be found guilty of misleading or exploitative advertising directed to vulnerable customers.
With the new regulations gambling operators cannot broadcast during live sport events and also they will need to avoid using wordings such as ‘Bet Now’ or ‘Risk-Free’ which could target vulnerable viewers. The general idea from the regulator is that using ‘Free Bet’ is misleading as it doesn’t state upfront that in fact mostly are matched bets. So operators will have to clearly say how much deposit will be needed before the customer can legitimately get the ‘free’ credits. Even though this information was normally present in the terms and conditions of the offer, it was still open to misinterpretation.
In regards to the ‘Bet Now’ type of promotion: this do provoke a sense of urgency in the viewer and could lead to a dangerous type of betting. From now on betting companies will be prohibited from using those types of phrasing in their advertising campaigns.
Also the ‘Money Back’ type of promotions have been scrutinised as again they do require some initial cash to be deposited by customers before they can get some free credits in return.
Another area of concern was the winnings accumulated from bonuses and free bets are normally capped by the operators. In accordance with the new rules these profit restrictions will have to be stated very clearly upfront.
So there are some radical changes in the UK gambling industry and the hope is that a positive effect will be seen during 2018. The good news is that customers will be enjoying a lot more transparency. Operators that won’t comply are at risk to losing their gambling license so they have to take those rules seriously. John Pentin chief editor of casino bonus aggregator CasinobiggestBonus.com commented: ‘Everything that is positive for customers is in the long run also positive for gambling business as it is in no-one interest to see problem gambling increasing. Those changes are likely to have in the short term a severe impact on the industry who will have to shape up to the new challenge and take a lot more responsibilities especially as far as advertising is concerned.’
It was clear that new rules had to be introduced. In 2017 there has been a number of scandals that exposed betting companies in a very bad way: there was advertising content that might appeal to children and untrained staff that was handling badly problem gambling issues.
FOBT Operators to see a dramatic stake reduction
The UK government also decided to crackdown Fixed-Odds Betting Terminals also known as FOBTs. Those machines did spark a lot of controversy in recent times as they do carry high addiction potential. If you not too familiar those are machines that offering digital casino games like roulette or blackjack for example. The main issue is that they allow punters to stake up to £100 every 20 seconds which has caused people to incur huge losses in very short-time.
Surely FOBTs are not only responsible for the rise in gambling addiction but also are a very good tool in the hands of money launderers. Even if the fraudsters will lose some of their ‘dirty money’ in those machines, the remainder of their illicit earnings will still look like legitimate gambling profits.
For those reasons the UK government have decided that they will reduce stakes from £100 to £2 per every 20 seconds. Surely those tough measures will have a positive impact for vulnerable customers however they could severely impact the business of top high-street betting firms such as William Hill and Ladbrokes Coral. Those two companies have lots of FOBT machines across the country and their revenue are likely to drop of hundreds of millions of pounds. This might well result in job losses across betting shops which might be followed by significant drop in the share prices of the companies affected. The estimated loss is not less than £1.8 billion which was around half of their annual revenue in 2017.
In the second part of 2018 we might see a lot more mergers
The significant loss of income from the FOBT coupled with a much stricter advertising rules might push lots of companies to merge. In December 2017 for example the merge between GVC Holdings and Ladbrokes Coral was announced. GVC Holdings acquired Ladbrokes Coral for £4 billion and the deal was also investigated by the UK Competition and Markets Authority (CMA) as there were concerns that it could lead to a significant competition reduction in the local market.
Another big gambling company, William Hill did negotiate with Stars Group (Amaya at the time) for a potential merge but eventually they failed to find an agreement. At the time tough Stars Group were a lot less financially stronger then now so it cannot be excluded that negotiations are likely to resume soon especially after the decisions made by the UK government on the FOBT stake reduction.
Even if the online gambling sector in the UK has had so far a tough year it is not all doom and gloom as in the country the gambling industry is set for steady growth also in 2018.
UKGC have indicated that interactive gaming is the biggest gambling sector in the country with a gross gaming revenue of £4.5 billion. New technologies like the arrival of Virtual Reality gaming is expected to push further the growth of the gambling sector with an expected growth of 800% by the year 2012. As everything the only option is now to wait and see what will happens in the next months.