Appraising the Real Social Impact of Gambling in the UK
Posted by Harry Kane on Tuesday, September 21, 2021
If there’s one trend that has caught the eye in developed economies throughout Europe since the beginning of the 21st century, it’s the liberalisation of the gambling industry.
While the UK is undoubtedly blazing a trail for others to follow with regard to this trend, nations such as Italy, Sweden, Germany and even Denmark have built highly lucrative and incredibly liberal iGaming markets that are worth billions of pounds.
However, the liberalisation of iGaming has arguably increased the risk of societal harm caused by gambling, although this is occasionally exaggerated and misrepresented in the media. So, we’ll explore this further below, while appraising the true social gambling of gambling in the UK.
The Path to Liberalisation Throughout the Western World
The most progressive online gambling markets in the world have followed a similar path towards liberalisation, with the UK offering a relevant case in point.
This nation first introduced a National Lottery in 1994, for example, with this gradually transitioning online as the digital age began to take hold.
This was followed 11 years later by the transformative Gambling Act from 2005, which was passed by Tony Blair’s Labour administratio all forms of online gaming while creating a stringent regulatory framework to help protect players and operators alike.
As a result, the Gambling Act also led to the formation of the omni-potent UK Gambling Commission (UKGC), with this body responsible for the regulator of the entire industry in the UK and ensuring that operators adhere to the ever-changing criteria of their license agreement.
While this has inspired other countries such as Italy and Sweden to follow suit in recent times, it’s fair to say that we’ve seen a significant sea change in attitude as the UK’s iGaming market has matured.
More specifically, the UKGC announced the safeguarding of players and the upholding of the industry’s wider reputation as its core strategic objectives through 2021, with this resulting in a number of stringent restrictions being rolled out in the three years since 2018.
One such measure was the decision to ban credit card usage across all online gambling platforms, while operators are now required to verify the identity (and age) of their customers before enabling them to wager.
There have also been some record-breaking financial penalties handed out to operators who have failed to adequately protect problem gamblers, with firms paying out a cumulative amount of £19.6 million in fines as recently as 2019.
We’ve also seen a growing legislative creep in the UK’s iGaming market, as the sector’s growing maturity and scope had begun to impact on society.
This led to the controversial, £2 FOBT cap in 2019, which slashed offline bookmaker revenues and encouraged the Treasury to increase the remote gaming duty (RBG) used by online brands by 6% to 21%.
Real Social Impact of Gambling on UK Players
Clearly, the UK marketplace is now moving in a slightly different regulatory and legislative direction to the entities that it inspired on the continent, despite the continued growth and expansion of online slots and table games.
As we’ve already touched on, the rationale for this lies with the societal harm caused by widespread gambling, especially younger and potential vulnerable citizens face increased exposure to iGaming verticals online.
Another key here is the speed of virtual games, which are typically quicker than those played in brick-and-mortar casinos and enable players to wager more within a given period of time. This is especially true in the case of slots, where gamblers can also deploy an ‘Auto Play’ feature to automate spins and increase the speed of the gameplay further.
This has created a perception that online gambling is potentially more harmful than land-based casinos and bookmakers, with this assertion seemingly supported by selected figures.
For example, a 2020 survey conducted by the UKCG showed that 21% of respondent had gambled at least one during the previous four weeks, with this number having increased incrementally from 18% since the previous year.
The ongoing transition to online gambling (which grew to account for more than 385 of the overall industry in September 2020) was also accelerated through last year, with a staggering 95% of respondents claiming that they preferred wagering at home.
A further 12% wager frequently during their daily commute to and from work, which also highlights how gambling has become more prevalent since the advent of mobile gaming.
While some of these figures may be striking, they’re not enough by themselves to be indicative of widespread gambling related harm. This is because they simply betray an increase in the popularity and prevalence of iGaming verticals, rather than revealing whether this hike in activity has translated into a higher rate of problem wagering.
In fact, there are other figures which suggest that the negative social impact of gambling may be being exaggerated in the media.
To begin with, the UKGC found that the overall problem gambling rate in the UK fell from 0.6% to 0.3% through 2020, with this nominal decline hardly indicative of a growing or rampant issue.
What’s more, the overwhelming majority of Brits wager incredibly small amounts on a regular basis, spending an average of just £2.60 on gambling activities across the board. This equates to a total sum of more than £135.20 per annum, with is more than manageable for most households and individuals.
In fact, iGaming brands are increasingly reliant on the bulk of their revenue from a vanishingly small number of high-rollers, many of whom participate in so-called “VIP programs”.
This was borne out by a UKGC report which analysed nine anonymous operators, one of which was found to take a staggering 83% of its total deposits from a paltry 2% of its customers. This trend was evident throughout the report, while it’s unlikely to change anytime soon.
So, while it would be perfectly reasonable to suggest that online VIP programs may be problematic from the perspective of compulsive wagering and gambling-related harm, it’s not necessarily accurate to say that about the iGaming industry as a whole.