How do Casino Regulations Really Impact on Players?

Posted by Harry Kane on Monday, August 13, 2018

In many ways, the UK’s approach to regulating online gambling and casino gameplay represents something of a paradox.

On one hand, for example, its laws are among the most liberal and progressive across the whole of the western world. On the other hand, however, the British market is one of the best and most stringently regulated on the planet, while the UK Gambling Commission (UKGC) is also committed to further safeguarding the interests of vulnerable players nationwide.

In this post, we’ll address this apparent juxtaposition, while asking how the current range of regulations really impact on players.

The 2005 Gambling Act and Subsequent Updates

In many ways, the regulatory framework of the UK market can be separated into two, distinct phases. First came the liberalisation of gambling laws with the 2005 Gambling Act, which was passed by Tony Blair’s government and transition its categorisation from vice to a type of adult entertainment for the digital age.

Then came a number of significant updates, which were published in a revised act for 2014. These focused primarily on maintaining the existing freedom of choice for customers while also tightening laws pertaining to online security, money laundering and the tax levies payable by operators.

Each one of these regulatory measures has had a considerable impact on customers, and the overall experience that they’re able to enjoy when frequenting online casinos. But what are the most impactful regulations, and how they affect players across the full range of platforms?

Online Taxation and the Cost of Operation

One of the biggest regulatory changes was the introduction of the so-called point of consumption levy, which ensured that British operators based in tax-friendly jurisdictions such as Jersey and Gibraltar paid duties to the country in which their games were played.

This remains at a fixed rate of 15%, meaning that the UK Treasury is earning a huge amount from operators who have strategically based themselves overseas. This tax is applied as games are played, rather than being taken out of the company’s profits once they’ve banked their turnover.

These entities are then required to pay a further 15% levy on gross profits, with some have arguing that this serves as a form of double taxation that accrues a total of 30% from the same income source.

While this delivers a lucrative and increasingly important income stream into the government’s coffers, it’s arguably had a negative impact on customers. More specifically, some operators may have been inclined to pass some of these additional costs onto consumers, in the form of higher price points and less generous pay-outs. Such differences may not be immediately obvious to customers, of course, but they’d most likely have an incremental impact over time.

Various operators have already spoken out about the challenges they face in terms of taxation, directly in relation to the threat of further hikes in the future. After all, the government is expected to increase the Remote Gambling Duty from next year, in order to offset the revenues lost by capping the maximum betting threshold for fixed-odds betting terminals (FOBTs) at just £2.

This will be an interesting space to watch in the future, with excessive tax hikes likely to force some operators overseas or at least increase the bottom line cost to consumers.

Licensing, Accreditation and Fairness

From a more positive perspective, the original Gambling Act of 2005 and its future revisions have reinforced increasingly stringent licensing requirements in the UK.

In the current market, every single operator (whether they offer online sports betting, virtual casino gameplay or both) must receive a license from the UKGC. This must be applied for and granted in full before an operator can trade, and the process ensures that all operators are compliant with UK regulations and capable of offering a secure gaming platform.

This is just one of the many similarly proactive measures taken by the UKGC since the Gambling Act was announced in 2005, with the Commission having largely stood by its commitment to make the virtual gambling space safe, enjoyable and as transparent as possible.

The issue of transparency is a particularly interesting one, especially as the Commission are continually working to improve this aspect for the benefit of players. One of the most interesting developments of recent times was the ruling that operators must publish RTP (return-to-player) rates in relation to individual games, so that players are aware of the prevailing house edge and probability of winning at all times.

This is most commonly associated with slot games, where low, mid and high-variance games will feature RTP rates of between 88% and 97% on average. This is an extremely positive feature for players, who can make more calculated decision in terms of the games that they play and create an experience that suits their individual appetite for risk.

On a similar note, online operators must also show that they’ve thoroughly and independently tested for fairness through the use of random number generators (RNGs), in order to ensure that individual outcomes are determined fairly and in an entirely opportunistic manner.

This affords genuine peace of mind to players, while such regulations enable discerning and security-conscious customers to distinguish between reputable sites and fraudulent alternatives.

The Bottom Line – How Will Future Regulations Change the Market?

Overall, the UK’s proactive and progressive approach to regulating the gambling market has proved central to its exponential growth over the course of the last 12 years or more.

It’s certainly created a more secure and transparent marketplace, in which players are empowered through the freedom of choice and fair gameplay.

There remains much work to be done, however, and this is showcased by the UKGC’s renewed commitment to safeguarding vulnerable players and the reputation of the industry as a whole. These represent two of the Commission’s core strategic objectives through 2021, as they look to tackle significant issues within the sector and do more to protect players who cannot help themselves.

This bodes well for the future of the marketplace, as the UKGC must remain on the front foot if they’re to successfully evolve their regulations in line with the rapid growth of the online industry.

So, while it’s hard to offer an accurate insight into the regulations of the future, there’s no doubt that many will continue to focus on improving player safeguards and placing a greater emphasis on operators to become responsible gambling ambassadors.

The UKGC may also look to move away from the decentralisation of gambling oversight, which was part of the 2005 Act and delegated significant responsibility to local authorities. It was this moved that enabled FOBTs to become commonplace across the UK, and by seizing back control in the future the Commission may be better placed to achieve its primary goals.