Is the Government Relaxing its Approach to Offline Gambling?

Posted by Harry Kane on Tuesday, March 26, 2024

The UK government and Gambling Commission have sought to tighten online betting restrictions of late, as the iGaming and sports wagering verticals have become increasingly lucrative and accessible. This clampdown was further reinforced by Parliament’s gambling white paper, which has proposed a betting cap for online slots and reintroduced the prospect of affordability checks.

Previously, the UKGC and Conservative government also sought to crackdown on offline gambling and fixed-odds betting terminals (FOBTs). More specifically, they introduced a maximum FOBT cap of £2, eventually impacting bookmaker revenues negatively to the tune of more than 50%. However, the government now appears to be loosening brick-and-mortar betting rules for casinos and similar locations.

How are the Government Loosening Offline Betting Rules?

According to a recent report issued for the UK government’s Department for Culture, Media and Sport, cashless payments are now going to be allowed on a variety of gaming machines. These include casinos, bingo halls and arcades, making it significantly easier for patrons to access betting experiences in such locations.

Under the new proposed rules, establishments would also be permitted to install more gambling machines (such as FOBTs). This will simultaneously see the maximum fee cap charged by the government in relation to gambling licenses increased by 15%, depending in part on the number of machines installed. Potentially, this may also create a higher inflow of tax revenue into the nation’s Treasury.

Additionally, the new guidelines will introduce a new age limit of 18 for the use of such gambling machines. It’s unclear how this will be enforced at locations such as arcades, but the goal here is to help safeguard underage players and prevent them from accessing specific gambling games and verticals.

The stated goal here is to cultivate and introduce measures that will support the brick-and-mortar gambling sector and modernise the existing (and potentially outdated) regulatory framework. The government has also claimed that it wants to safeguard younger and underage players, although the introduction of cashless payments may prove detrimental to individuals who have previously showcased compulsive gambling behaviours.

Are There Any Alternative Motives for the Recent Regulatory Reforms?

Of course, cynics may suggest that the decision to increase licensing fees by 15% is central to the recent regulatory reform. After all, this will translate into a significant increase in tax revenues into the UK Treasury in some cases, delivering direct financial support to licensing authorities and any potential revenue declines in the online gambling space.

A similar pattern was observed after the decision to slash the FOBT maximum betting cap from £100 to £2. In this instance, bookmaker revenues and their subsequent tax contributions were slashed, while major brands like Ladbrokes and William Hill were required to implement several store closures and staff layoffs. However, the government subsequently increased the rate of Remote Gaming Duty (RGD) payable by online brands from 15% to 21%.

Here, the government sought to offset the tax implications of one regulatory decision by increasing the contributions of online casinos and remote sportsbooks. So, it makes sense that just weeks after a £2 maximum bet cap was proposed for online slots, the government should loosen offline gambling regulations and increase the amount payable via licensing fees.

Some critics will point out that the decision to accept widespread cashless payments makes gambling more accessible to vulnerable or underage individuals (notwithstanding the introduction of a new age limit at arcades). In this respect, the new measures could counter previous attempts to regulate offline gambling and cap FOBT betting, so this will be an interesting space to watch in the future.

A Look at the Wider Regulatory Climate

The government is clearly trying to strike a balance in terms of how it regulates off and online gambling verticals, while attempting to optimise tax revenues earned through these lucrative sectors. However, it may face alternative regulatory challenges in the near-term, with intuitive betting apps and gamification blurring the lines between the corporeal and online realms.

Most recently, restaurant and entertainment brand Dave & Buster’s have partnered with gaming tech firm Lucra Sports, with a view to integrating gamification software into the former’s loyalty app. This will introduce elements of betting and iGaming in what is essentially a non-gambling app and commonplace in-person experience, creating a direct link between offline spending and virtual wagering.

Interestingly, the partnership was also announced in a way that avoided the use of terms such as ‘betting’ and ‘wagering’. Instead, it discussed real money contests and challenges, in a bid to ensure that the app and its associated loyalty program would operate under a different regulatory framework to a gambling operator.

The potential implications here are huge, as users may be inclined to bet more and move more of their money around in the online ecosystem. It will also further incentivise the current generation of casual bettors and players, who wager during their spare time and as part of more generic everyday activities.

Even basic arcade games such as ‘Skee-Ball’ (which was one of the first ever redemption games and features just a rolling ball and ball-hop hump) can be revolutionised by such gamification, transforming them into far more immersive betting experiences. This will definitely pique the interest of iGaming regulators, although attempting to police this type of multi-channel betting could prove challenging.

Ultimately, the fusion of off and online betting activities will be the ultimate challenge for legislators and regulators. However, it may also compel them to create a much broader and unified approach to regulating gambling both on and offline, rather than moving from one vertical to the next and attempting to balance tax revenues.