Key iGaming Facts and What we Can Glean from Them
Posted by Harry Kane on Wednesday, July 7, 2021
There’s no doubt that the iGaming industry in the UK continues to face some significant regulatory and legislative challenges, particularly with the government having recently launched a comprehensive review to ensure that the existing gambling legislation is suitable for the digital age.
However, this hasn’t yet detracted from the market’s growth potential, with iGaming producing a total GGY of £5.7 billion in the year ending March 2020. This represented an 8.1% increase on the previous year’s figures, with this trend expected to continue through 2021.
In this blog post, we’ll delve a little deeper into some of the market’s facts and statistics, while asking what they tell us about the present and future for iGaming in the UK.
1. Casino Games Generated £3.2 Billion in GGY Last Year
We’ve already touched on the impressive iGaming GGY reported in March 2020, with this yield dominated by casino games.
More specifically, casino games accounted for $3.2 billion of the sector’s total $5.7 billion haul, with this representing a 56.1% share of the overall iGaming market. Conversely, the GGY for remote sports betting totalled £2.3 billion (40.3% of the sector), while online bingo grew by a nominal 0.9% to generate £176.8 million.
If we drill down deeper into these numbers, we also begin to see the increased dominance of online slots within the marketplace.
More specifically, the numbers suggest that slots account for a little under two-thirds (66%) of the total casino game yield, with this vertical particularly popular amongst new and casual players. So, as the number of Brits who wager online continues to increase (we’ll have a little more on this below), so too themed and innovative slot games evolve to dominate the iGaming marketplace.
Interestingly, the landscape could be about to shift markedly, especially if the aforementioned licensing review is a precursor to further legislative changes and the implementation of a widespread cap in the online slots vertical.
Remember, a paltry £2 cap has been proposed by the All-Party Parliamentary Group (APPG) for gambling-related harm, with this mirroring the betting limitations previously imposed on fixed-odds betting terminals (FOBTs) across the length and breadth of the UK.
While this wouldn’t necessary impact negatively on the profitability of slot gaming for casino operators (as payouts would diminish in line with dwindling stake amounts), it would dramatically reduce turnover and the amounts banked by betting brands every single year.
It may also impact on the popularity and dominance of slot gaming in the online gambling space, as titles within this vertical would become less rewarding and enticing from a fundamental risk-reward perspective.
2. 47% of Brits Visit Online Casinos Regularly
As we’ve already touched on, a growing number of Brits now regularly wager online, with nearly half of the total UK population visiting at least one virtual casino on a recurring basis.
More specifically, it’s now estimated that 47% of Brits visit online casinos at least once a month, the vast majority of which are categorised as casual gamblers who play for pleasure rather than the sole pursuit of profits.
This is borne out by the fact that the average Briton spends approximately £2.60 a week on betting, with this adding up to an annual spend of more than £135.20.
This is an interesting insight, particularly given the Social Market Foundation’s recommendation that gamblers in the UK should be protected by a £100-per-month spending cap. The iGaming think-tank and lobbying group has put forward the proposal as a way of potentially minimising gambling-related harm, which continues to place a deceptively significant drain on society.
Of course, this recommendation is based partially on the recent revelation that the UK’s leading iGaming brands are increasingly reliant on so-called ‘VIP players’ who contribute a vast proportion of total deposits despite representing a vanishingly small demographic.
For example, one anonymous operator took approximately 83% of its cumulative deposits from just 2% of its customers, while another earned 58% of its betting account contributions from a VIP cohort that comprised just 5% of its consumer base.
What’s more, a report commissioned by the UK Gambling Commission (UKGC) found that such players are more likely to demonstrate problem behaviours, particularly in terms of losing large sums of cash and potentially wagering considerably more than they can afford to lose.
However, if we consider all the facts at our disposal, we see that the imposition of a £100 monthly betting cap would have be largely ineffective and impact barely 5% of online gamblers in the UK. In fact, it would have absolutely no impact on the vast majority of gamblers on these shores, who wager a little over £100 over the course of the typical year.
This should inform the approach of think-tanks and regulators alike, who would be far better served by imposing more stringent checks on VIP players and creating bespoke limits based on demonstrable earnings and spending power.
While this may seem slightly intrusive, it enables regulators to fully verify VIP players and minimise gambling-related harm while ensuring that casual gamblers aren’t unduly affected.
3. The National Lottery Remains the Most Popular Form of Gambling
When we consider both online and offline gambling, it’s clear that the National Lottery remains the single most popular betting vehicle in the UK.
In general terms, an estimated 30% of Britons regularly participated in the National Lottery in the year ending March 2020, with this number continuing to increase incrementally over an extended period of time.
This trend is also borne out by more granular data sets, such as National Lottery ticket sales both on and offline.
More specifically, ticket sales increased by a healthy £696.4 million to £7.9 billion in the year ending March 2020, with this supporting a GGY equivalent increase of £319.9 million (10.4%) to £3.4 billion. As a result, this established the National Lottery as the second-largest sector by the measure of GGY, which is an impressive achievement given its longevity and the relative lack of advertising that surrounds it.
Clearly, the National Lottery remains a deceptively large contributor to the iGaming market in the UK, particularly as ticket sales volumes continue to increase online.
Interestingly, the primary contribution to worthy causes from National Lottery ticket sales also increased by £172.3 million (or 11.6%) during the same reporting period, rising to £1.7 billion in the process.
This is a worthy and significant accolade, and one that reflects the positive impact of regulated gambling and gaming in terms of socio-economic contributions.
4. Total GGY for Gambling as a Whole Declines by 4.5%
While the GGY for online gambling increased by an impressive 8.1% in the year ending March 2020, it’s interesting to note that this didn’t translate into overall gains for the UK gambling industry as a whole.
To put this into context, the £8.1% hike in total iGaming yields contrasted sharply with a 4.5% decrease across the entire gambling sector. This saw the industry’s total GGY fall to £10.2 billion in March of last year, while forecasts suggest that the number could fall further still in the years to come.
But what exactly precipitated this decline? While the diminishing popular of offline gambling was at least partially responsible, the single biggest contributor was the impact of the aforementioned FOBT cap.
More specifically, the total GGY for non-remote sports betting (including FOBTs) was estimated at £2.4 billion in March 2020, and while this may seem like an impressive sum of money, it actually betrays a whopping a year-on-year decline of 26.4% overall.
Of course, the market was primed for such numbers, with the £2 FOBT cap officially imposed in April 2019. At the time, bookmakers were primed for more a hit of more than £200 million to their annual profits in the wake of the cap, after the total FOBT spend on these shores peaked at a staggering £1.7 billion in the year ending September 2015.
As a result of this, the FOBT yield accounted for 56% of all betting shop profits at the beginning of 2018, so it was to be expected that such a stringent cap would impact negatively on operators and the marketplace as a whole.
As you can imagine, this also translated into a sharp, 7.7% decline in the number of active betting shops in Great Britain, with just 7,681 open for business in March 2020. This was a direct result of the FOBT cap, as even leading brands such as William Hill and Ladbrokes were forced to close select stores and lay off thousands of staff members.
In total, the number of active brick-and-mortar gambling premises in the UK stood at 10,098 in March 2020, with this number 6.4% lower than 12 months previously.
5. Europe Accounts for 54% of the Global Online Gambling Market
According to a study commissioned by the Edison Investment Research group, Europe (and by extension, the UK) dominated the global online gambling market as recently as 2018.
At this time, the region claimed a 54% share of the global marketplace, ahead of Asia and the Middle East (12%) and North America (12%). Of course, the rapid growth that continues to underpin iGaming in America means that this market will claim a considerably and incrementally larger share in the near-term, and this will definitely be an interesting space to watch in the future.
But what precise role does the UK market play in Europe’s dominance? Well, it accounted for 15% of Europe’s iGaming GGY during the reporting period, making it the largest single contributor ahead of similarly impressive markets like Italy and Spain.
This is impressive given the size of Europe and the number of countries that have legalised iGaming in the region, especially when you consider burgeoning marketplaces like Sweden, Denmark, Bulgaria and even Poland.
Not only is the UK’s influential role underpinned by a progressive regulatory framework and significant advantages from the perspective of responsible gambling technology, but it’s also impacted heavily by the sheer popularity of casino gameplay and remote betting on these shores.
This has already been borne out by some of the statistics previously featured in this article, but there are others that also support the UK’s prominence in the European and global marketplaces.
For example, a study published in the Jerusalem Post in 2019 found that there were approximately 33.6 million active accounts with licensed (and reputable) online gambling platforms in the UK. This represents a huge number of people, the vast majority of which continue to wager casually and spend manageable amounts each and every month.
Similarly, the UK boasts the single largest number of fully licensed and regulated online gambling operators in the world, with more than 100 currently competing aggressively for a viable share of this lucrative marketplace.
This has contributed to an increasingly innovative and competitive UK marketplace, and one that provides some of the most lucrative welcome offers in the world and an enjoyable iGaming experience for players across the board.
Of course, the UK’s global market share could well decline in the wake of potential legislative changes, especially in the form of a slot gaming betting cap and potential spending limit. For now, however, it remains a significant worldwide player, and one that continues to sell its products and expertise into the American marketplace.
The Last Word
These five facts are definitely insightful, both in terms of the scale of the UK marketplace and its potential for growth and expansion in the near, medium and longer-term.
It also highlights the main areas of growth within the iGaming space, while revealing the challenges facing offline gambling on these shores.
Arguably, it also puts some of the potential legislative changes on these shores into context, with the UK government poised to introduce more stringent controls and measures in the quest to safeguard vulnerable gamblers.