The £2 Slot Betting Cap – What Will it Mean?

Posted by Harry Kane on Friday, January 19, 2024

Ministers in the UK have now been consulting on imposing a maximum stake for online slots and selected casino games for months now, ever since the government’s white paper on gambling reform was published last year. They’re now close the announcing their final decision.

This will have a seismic impact on operators, particularly with the maximum stake limit likely to be prohibitive and highly transformative. But what level will the maximum stake eventually be set at, and what financial cost will eventually be incurred by operators? Let’s find out!

What Slot Betting Limit Will the Government Announce?

According to initial reports, the government is set to impose a new maximum bet limit of £2 on slot games. This will apply to all players aged 25 and under, while a slightly higher and more flexible threshold may be unveiled for older customers. This is expected to be £5, although the finer details of the recommendation will be confirmed shortly.

This will mirror the legislative move made in 2019, when the government imposed an identical, £2 betting cap on the fixed-odds betting terminals (FOBTs) found in brick-and-mortar bookmakers. This cost bookies approximately 56% of their annual revenue, while the impact of an online slots cap could theoretically cost even more in earnings.

After all, the previous maximum bet cap for FOBT machines was £100. Conversely, players can wager in excess of £200 per spin on selected slots, especially progressive jackpot games that also offer incrementally higher payouts. However, there’s no formal or fixed betting limit in play. The slot cap will also increase the need for more stringent age verification, due to the subtle difference in limits for those who are aged under 25 and over.

How Did We Get Here?

The proposal to slash the maximum bet limit for online slots has been discussed for years now, while it was formally recommended in the aforementioned government white paper on gambling reform. This paper was published in April 2023, while it included a number of additional measures such as more stringent affordability checks and complete licensing review.

The paper suggested capping slots bets within a range of £2 and £15, while affirming that a mid-range maximum limit of £8.50 would be preferable. Early estimates suggested that this level of restriction would cost the gambling industry up to £185 million in the UK, so the level of loss will be even more pronounced in the case of respective £2 and £5 caps.

What’s more, the decision to set two separate limits is likely to introduce additional costs for operators. Certainly, it will require brands to invest more in accurate age verification measures, especially when you consider the additional cost of carrying out affordability checks on players aged 25 and under.

Regardless, if respective caps of £2 and £5 are confirmed, online casino brands and the industry as a whole will face significant financial costs. These are likely to dwarf the financial impact of the previous £2 FOBT cap, while the fact that operators will also have to reduce payouts could also discourage players from registering in the first place.

Will the £2 Online Slots Cap be Effective?

Of course, some will argue that the online gambling industry can afford to take such a financial hit, while the ability to reduce payouts may also help operators to protect their profit margins. However, it will also directly impact the online gaming vertical with the biggest GGY in the industry, with slots accounting for £3.2 billion (nearly 80%) of the £4 million generated by online casinos in the year ending March 2023.

Online casinos are also the fastest growing segment of the wider gambling industry in the UK, which banked £11 billion in revenues last year (excluding the money generated by the National Lottery). So, this will have an impact on growth and prove truly transformative within the industry, especially when you consider the effective safeguarding of young players.

However, Labour MP Carolyn Harris, who chairs a cross-party group of MPs examining gambling-related harm, has suggested that the suggested proposals don’t actually go far enough. In fact, she believes that there’s ample evidence to suggest that a £2 slot cap should be rolled out for everyone, in a bid to more effectively prevent harm throughout society.

This thought is likely to be echoed by a number of gambling-related charities such as “Gambling With Lives”, although a betting cap of £2 for younger players will receive significant support. Of course, the government will face significant lobbying to continually monitor the industry and further reduce the £5 cap for older players in the future.

But will such caps prove effective? Well, they will certainly prevent players from wagering excessive amounts on single spins, while minimising the risk of younger players developing compulsive behaviours. It also sends another clear message to operators and requires them to conduct more stringent age verification (and potentially affordability checks) going forward.

However, capping the bet limit does little to tackle the length of time that players spend betting online. Even with a £2 or £5 cap, players will still be able to wager significant sums of money over extended periods of gameplay, meaning that the measures will help to reduce the perceived harm caused by slots rather than curb it entirely.

There’s also an argument that such measures will drive customers and younger players in particular in their droves to the burgeoning black market. Various studies have shown that rogue operators are becoming increasingly popular amid the rollout of more stringent legislation, with one conducted by the Horseracing Bettors Forum revealing that 73 out of 296 respondents will consider using unregulated black market operators if betting caps or affordability checks were rolled out.

So, while slot betting caps make perfect sense on some level, they could prove counterintuitive without further steps to restrict black market betting activity. Once again, they also do little to tackle the underlying issues that contribute to problem gambling in the UK, so it will be interesting to watch this space closely in the future.