How Politics Inspired the UK’s iGaming Boom

Posted by Harry Kane on Sunday, September 13, 2020

There’s currently a great deal of focus on the UK’s iGaming legislation, with the government and the All-Party Parliamentary Group (APPG) for gambling-related harm pushing for the introduction of more punitive laws.The recent iGaming boom in the UK was arguably inspired by the machinations of political giants such as Tony Blair and the New Labour Party, who effectively paved the way for the huge market growth that we’ve seen in recent times. In this article, we’ll look back at how politics inspired the growth of iGaming in the UK, while asking how the relationship has changed since 2005.

Politics and Gambling – a Complex and Long Standing Relationship

If we cast our minds back to the early 1900s, we’ll see that horse racing betting was the only legally recognised form of wagering in the UK.

Of course, this was almost 100 years before the evolution of the Internet and the creation of in-play sports betting, but it contrasts sharply with the legislation that was in place by the turn of the century.

By the 1920s, both greyhound racing and football betting had earned some form of prominence in the UK, while the formulation of the iconic Littlewoods Pools around this time made sports wagering accessible to the working classes in England, Wales and Scotland.

Even though the landscape shifted slightly in 1960, this did little more in practice than legalise existing bookmakers and casinos and provide additional protection for Brits.

This legislation was tightened and restricted over the course of the next 10 years, as legalised gambling became something of a battleground for different political factions to contest.

It wasn’t until the early 1990s that the UK developed a decidedly pro-gambling approach, with the formation of a National Lottery particularly indicative of this changing mindset. However, this paved the way for new and more progressive legislation, coinciding with the election of a seemingly radical and forward-thinking New Labour party in 1997 and the rapid expansion of iGaming in the UK.

Just eight years later, Blair’s government introduced the game-changing 2005 Gambling Act, which sought to regulate the fast-growing online marketplace and allow for its safe expansion as a revenue generator for the state.

What Did the 2005 Gambling Act Change?

By the mid-noughties, the global iGaming market had grown exponentially, from relatively humble beginnings in the middle of the 1990s.

However, this had created a number of vast and largely unregulated international markets, which were breeding grounds for rogue operators, reckless promotional offers, and problem gambling.

There are different ways to deal with such an issue, of course, with the US government introducing the infamous Unlawful Internet Gambing Enforcement Act of 2006 (UIGEA) as a way of prohibiting businesses from accepting payments in relation betting and wagering.

Although this made an exception for fantasy sports betting, it decimated the burgeoning US market, while its legacy remains to this day (despite many of the restrictions having been relaxed at state level).

The UK government took a different approach, with Labour arguing that the 2005 Gambling Act would help to create a safe and well-regulated marketplace that would allow for growth while actively minimising gambling-related home.

The new legislation also proposed the formulation of the UK Gambling Commission (UKGC), which would serve as the sole regulatory body for the market and ensure that all brands operated responsibly and within a clearly-defined legal framework.

When the act came to pass, the UK became the first country to fully legalise iGaming in the world, with this liberal approach revolutionising a fast-growing market and creating a regulatory structure that has introduced concepts such as accountability and (more recently) responsible gambling.

Interestingly, the progressive approach of legalising all iGaming verticals and introducing stringent regulations has since been copied throughout Europe, while it has also arguably inspired the US to make incremental changes at state and federal level in the last decade.

Have we Now Come Full Circle in the Global iGaming Market?

While the 2005 Gaming Act implemented sweeping changes that were relatively progressive for their time, they failed to account for the relentless rate of growth that has defined the Internet in the years since.

In this respect, the legislation has arguably failed to adequately regulate those operating in the UK’s contemporary iGaming market, with these shortcomings becoming increasingly apparent with every passing year.

To this end, Labour’s former deputy leader Tom Watson once described the 2005 Gaming Act as analogue legislation in the digital age and is one of the many reasons why Parliament wants to overhaul the law and implement a full review of the existing licensing conditions.

The 2005 Gaming Act has therefore come full circle, despite once modernising the marketplace and transforming iGaming into a huge generator of revenue for the UK’s Treasury. It’s becoming increasingly outdated and in need of marked change if the issue of problem gambling is to be tackled effectively going forward.

However, what’s interesting is that the aforementioned APPG is looking to take a different path towards regulating iGaming in the UK, primarily by introducing robust betting caps, restricting certain payment methods and banning all forms of gambling advertising.

Some of the measures have already been adopted by the UKGC, with the use of credit bans on April 14th after it was found that almost 20% of all online deposits were made using borrowed capital.

The rollout of a £2 betting cap would be most impactful, of course, as while this wouldn’t necessarily reduce profit margins (as the value of prizes would also decline proportionately), it will dramatically slash revenues and tax receipts paid into the Treasury.

Regardless of what happens in the future, there’s no doubt that politics played a seminal role in the rise of iGaming in the UK. However, it’s also clear that politics could yet dramatically undermine growth in the states, just as it has in North America and similar regions.