How New Regulations will Impact on UK Casinos

Posted by Harry Kane on Friday, December 8, 2017

Whisper it quietly, but there’s something of a sea change taking place in the UK’s online and offline gambling markets.

In a previous post, we talked about how UK regulators have come under increased pressure to drive responsible gambling, while changing the ways in which brands promote their services. The position of the UK Gambling Commission (UKGC) was made clearer when it announced five strategic priorities between now and 2021, each of which was focused on protecting customers and delivering a more responsible message across the board.

Make no mistake; the UK regulator has been busy implementing more stringent regulations that will safeguard customers and force operators to think long and hard about their position in the marketplace. In this post, we’ll take a look at which aspects have been impacted and what this will mean for operators.

Advertising practices – Protecting young and potentially vulnerable gamblers

We should with a basic assertion, as reputable online casinos are unlikely to be adversely affected by the updated regulations. After all, the intention of the UK regulator is not to restrict the marketplace, but instead to create a safe and transparent experience for customers.

Still, one of the main targets for regulators has been the advertising practices utilised by casino brands within the virtual space. This move has come on the back of various studies and commissioned periods of research, which have targeted live sporting events and in-play betting in particular.

The results were telling, with a staggering 95% of all breaks during live football matches including at least one gambling commercial. Similarly, an estimated 20% of all adverts broadcast during real-time sporting action were commissioned by casinos, with the incentive of in-play wagering capable to targeting customers when they are at their most engaged.

The UKGC was also moved after questions were raised concerning some brand’s TV advertising strategies. More specifically, we’ve seen a noticeable increase in the use branded characters and mascots, a number of which have clearly been based on famous characters from children’s literature.

As well as featuring prominently on slot game titles, characters inspired by icons such as Little Red Riding have gradually begun to infiltrate popular marketing campaigns. The concern here is that operators could be indirectly influencing the minds of children and those who are below the legal gambling age, which represents a complete affront to a responsible gambling ethos.

The result ban on such advertising practices (and the move to restrict in-play adverts during live sporting events) has been greeted positively by operators, many of whom are looking to position themselves as ambassadors for responsible gaming. It’s also fair to say that a growing percentage of operators’ marketing spend is invested into digital channels, which are unlikely to be adversely affected by the new regulatory approach.

Reducing the maximum stake at Fixed-odds Betting Terminals (FOBTs)

Offline casinos are also being affected by regulators, who are aware than brick-and-mortars establishments remain popular as some struggle with the transition online.

Fixed-odds betting terminals (FOBTs) are the main focus for regulators and government backed bodies, as they have been for a period of years. More specifically, there’s a clear drive to heavily regulate FOBTs and dramatically reduce the maximum stake that they offer to gamblers.

At present, the maximum stake is fixed at £100, with the UKGC concerned that this is exacerbating the issues facing vulnerable or problem gamblers in Britain. In fact, a new law has already been drafted to cap this stake in the near future, with Parliament set to review this early in 2018 in order to determine the extent of the reduction. Some have even advocated a fixed cap of £2 per machine, but this is unlikely to be agreed as it would have a highly detrimental impact on operators and potentially cost the UK thousands of a jobs at a time when the economy is already waning.

While there’s no doubt that the maximum stake for FOBTs will be reduced at some point in 2018, a compromise is likely to be agreed on the price cap that is implemented. Still, operators will need to be prepared to adapt their pricing and potentially restructure their revenue streams in 2018, as otherwise they run the risk of losing money as they look to comply with the new regulatory measures.

What else is in the pipe-line for regulators?

These measures highlight the clear focus that drives the UK’s regulatory body in 2017, as it looks to protect the British people and prevent operators from inadvertently engaging vulnerable or underage gamblers.

They may also represent the beginning of a more in-depth regulatory purge, with some proposing the implementation of more stringent tax measures and increased consumption tax for operators. This would be an exceptionally controversial move that would hit online casino brands hard, as companies are already forced to pay a consumption tax of 15% at the point of sale in addition to corporation and income tax.

Given that a further hike would potentially deter growth, cost UK jobs and force operators off-shore, this is something that regulators and government officials should consider carefully before they choose to act.

Regulators may also choose to review the role of comparison sites and affiliations at some point in 2018. These third-party resources are required to provide independent data to customers, helping them to make informed decisions on where to play and which promotional offers to take advantage of.

Not only must these resources promote responsible gambling messages and include links to helpful resources that can help troubled players, but it’s also imperative that they have no affiliations with specific operators. This could compromise their service and the quality of the information that they provide, creating an illicit advertising portal that unfairly influences customers.

Once again, creating more stringent regulators for comparison sites would not affect reputable resources, as these entities already adhere to strict rules regarding data and affiliations. Instead, it would directly target websites that are failing to deliver a reputable service, either forcing them to comply and preventing them from publishing data in the future.