ComeOn Withdraws from the UK Market

Posted by Harry Kane on Thursday, September 5, 2019

At first glance, you could be forgiven for thinking that the UK gambling market is one of the most lucrative and coveted in the world. After all, this entity generated a hefty £5.6 billion in the year ending September 2018, as total revenues increased by 2.9% over a period of six months.

However, European brands are increasingly turning their backs on the UK market, thanks to a myriad of issues including the introduction of stringent regulatory measures, growing competitiveness and the challenges posed by a potential no-deal Brexit.

ComeOn is the latest operator to follow this path, and it has recently announced that has withdrawn all active brands from the UK. But what precise reasons have they given for the move, and what does it mean for the market as a whole?

A Stark Warning for the iGaming Market in the UK

Whilst the decision of ComeOn may have come as a surprise to some commentators, the brand has clearly thought long and hard about its position in the UK market.

This means that the flagship ComeOn.com domain will no longer be available to UK players, whilst subsidiaries including mobilebet.com and getlucky.com have also been withdrawn completely.

Perhaps even more alarmingly, ComeOn Chief Executive Lahcene Merzoug claimed that the decision was taken so that the operator could focus on “more favourable markets”, including fast-growing entities such as Sweden, Bulgaria and the Czech Republic.

This gave a clear nod to the stricter regulatory measures that have been imposed by the UK Gambling Commission (UKGC) in recent times, including harsher enforcements on customer KYCs and the care-of-duty that all operators are liable to provide for their paying consumers.

We’ll have a little more on this later, but there’s no doubt that other factors have also influenced the decision making of the ComeOn brand and their executives.

For example, ComeOn was acquired outright by Swedish investor Cherry AB in 2017, transforming the operator into its lead B2C vertical almost overnight. During this period of evolution, ComeOn moved to launch new instant play casino assets in Germany and Sweden, whilst also exploring new opportunities in the fast-growing Danish market.

As a result, ComeOn has gradually begun to switch its attention to new and emerging European markets, in order to avoid potential compliance issues and increase its potential profit margins in the near-term.

It’s also hard to overlook the importance of Brexit, with the UK poised to leave the EU on October 31st, regardless of whether or not a formal withdrawal agreement is reached.

In fact, the likelihood of a no-deal exit is increasing every single day, particularly now that new Prime Minister Boris Johnson has moved to prorogue Parliament in order to ensure the UK can leave on Halloween come what may.

Given that a no-deal Brexit would immediately sever the UK’s commercial ties with the European Union and make it exceptionally difficult for operators on the continent to deliver services across the Channel, ComeOn may well be pre-empting this turn of events and realigning its strategy ahead of time.

This has undoubtedly influenced the timing of the decision, as British users will no longer be accepted from 23rd September onwards. Existing customers won’t be able to place bets or complete deposits after the 27th, just four days before the UK is scheduled to leave the EU.

Furthermore, ComeOn is not the first operator to cut its ties with the UK market, with the JPJ Group having recently withdrawn its Vera & John and InterCasino brands and terminated their UKGC licenses.

What Else Does This Tell Us About the UK Marketplace?

Aside from the challenges posed by Brexit, it’s clear that the reasons cited by ComeOn for their withdrawal are indicative of wider trends in the UK marketplace.

For example, there’s no doubt that the UK market has peaked in recent times, having evolved to become incredibly mature and highly competitive since 2010. This has arguably created a saturation point, where brands are forced to invest huge amounts on marketing in pursuit of a dwindling market share.

At the same time, the introduction of increasingly stringent regulatory measures has created a heightened risk for operators, who must deal with the rising threat of non-compliance breaches. This generates significant financial risk, which is no longer offset by the profitability or growth potential boasted by the UK market.

Beyond this, it can be argued that the once-coveted UK license has lost its lustre and symbolic value during the last few years.

So, whilst operators once needed a license from the UKGC in order to establish credibility and a viable position in the European market, the emergence of reputable and high-growth entities in Sweden, Spain and Poland means that this is no longer the case.

In fact, operators like ComeOn can benefit hugely by focusing their efforts on the continent and securing licensing in relevant jurisdictions as and when required, without incurring the risks currently associated with iGaming in the UK.

The Last Word

ComeOn has always been something of a trailblazer in the iGaming space, from the development of instant play platforms to its work in the field of responsible gambling.

The operator worked diligently this year to develop a new responsible gambling tool, for example, in partnership with big data specialist Neccton.

This utilises Artificial Intelligence (AI) to track player behaviour and provide personalised feedback, whilst enabling the operator to set tailored deposit limits and minimsing the risk of gambling-related home.

The concern is that ComeOn is now setting a new trend for European-based operators to follow, by turning its back on the UK market and further highlighting the challenges facing British gambling brands.

Given the uncertainty and financial challenges facing the UK market, ComeOn’s decision to make their exit could well serve as a catalyst for other companies to follow suit in the near-term. This could have huge consequences for the UK, whilst creating potential job losses and causing the overall market size to dwindle.

With operators also facing a 6% hike in the Remote Gaming Duty (RGD) in October, there’s undoubtedly a perfect storm brewing in the UK’s iGaming market. Whilst some will choose to navigate this, however, others will seek flight and target new markets in Europe and the States.