The iGaming White Paper – A Comprehensive Overview

Posted by Harry Kane on Friday, July 8, 2022

When the highly anticipated iGaming White Paper landed in the UK, it ended years of procrastination, delays and intense speculation about its contents. Unsurprisingly, however, it has failed to satisfy all parties completely, with some of the proposals set to undergo further consultation before a final set of decisions is reached.

While we have yet to see precisely what the white paper means for the iGaming industry in the UK, there are a few immediate takeaways to keep in mind. For example, the brick-and-mortar gambling space appears to have come out of the report relatively well, barely four years after the controversial FOBT cap was brought in.

In this post, we’ll explore the key elements of the white paper in more detail, while asking what each measure means for the online gambling industry in the UK.

The iGaming White Paper Contents – What’s Included?

As we’ve already touched on, the government white paper includes a broad mix of defined regulatory changes and proposals, the latter of which will be finalised following the completion of a governmental consultation. We’ve broken down each measure in a little more detail below, while briefly summarising why they’re important from the perspective of players and operators alike.

The Rollout of Affordability Checks in the UK

Affordability checks have been recommended by responsible gambling lobbyists for years now, although many leading industry players have questioned precisely what form this measure should take. After all, the average Brit gambles barely £2.60 per week and £135.20 per year, at least according to information supplied by the UK Gambling Commission (UKGC).

This would have made widespread or blanket affordability checks both unnecessary and unjustifiably costly, so the iGaming white paper has sought to implement this measure in the best and most balanced way possible.

More specifically, players who lose £1,000 or more within a 24-hour period (or £2,000 over a period of 90 days) will be subject to detailed and intrusive checks on affordability. This may mean having to provide documented wage slips as proof of earnings, or copies of your bank account highlighting the relevant available funds.

Additionally, operators will be compelled to carry out “passive” checks on players who record a monthly net loss beyond £125 on their account, or annual losses that

exceed £500. While such checks could be less intrusive, they’ll still need to be carried out and could result in impositions being placed on an individual’s account in some instances.

This measure effectively feels like a compromise, and one that will see operators compelled to carry out affordability checks for all high rollers and players who incur specifically large losses. While the requirement to carry out passive checks for more casual players in some instances is more of a surprise, the measure is at least well-regulated and provides clear guidance for betting brands to follow.

A Consultation Regarding Stake Limits

As with the aforementioned FOBT cap (which was formerly rolled out in April 2019), the iGaming government has recommended the implementation of a stake limit on slots, within a predetermined range of £2 and £15 per spin. The government department for digital, culture media and sport (DCMS) will now conduct a consultation to determine the precise cap, which is likely to be set towards the lower end of the range.

After all, the £2 FOBT cap was the lowest threshold recommended in an initial, comprehensive report, so the DCMS has form for adopting a particularly stringent line when legislating on gambling issues. There’s also scope for flexible caps to be rolled out throughout the virtual slots vertical, with the lowest thresholds proposed for brand new accounts.

Similarly, younger account holders (who are aged between 18 and 24) may be hit with a £2 slots’ betting cap, while proposed triggers for intrusive and enhanced checks could also be halved for this demographic. Lobbyists and psychologists have opined that this is due in part to the lack of mature decision making and full emotional control in younger people, and the measure could have a significant impact in the iGaming space.

Remember, some 31.2% of Brits aged between 16 and 24 gambled in 2020, with this figure having risen incrementally over the course of the previous three years. So, operators are likely seeing a significant portion of their consumer base hit with £2 slot stake limits in the future, even if a higher or changeable maximum threshold is set across the board.

Of course, we have yet to see the precise stake cap set by the DCMS, while the scope for flexible bet limits and a higher threshold of £15 will be seen as a relatively compromise by most operators. However, if a more rigid £2 stake is imposed throughout the industry, this could have a seismic impact in terms of revenues and profitability over time.

A Mandatory Levy to be Paid by Operators to the UG Gambling Commission (UKGC)

Responsible gambling remains an increasingly important considerations in the iGaming industry, and one that has predated the recent drive to legislate the sector. In fact, the UK Gambling Commission (UKGC) made the safeguarding of potentially vulnerable players one of its core strategic objectives through 2018, and this has remained a priority ever since.

Over time, of course, the majority of brands have been more than willing to comply with responsible gambling guidelines, while also making voluntary contributions to the UKGC and its ongoing research in gambling-related social harms. However, it’s important to note that such contributions have always been voluntary, while there’s no set amount that operators have been required to pay.

According to the new iGaming white paper, however, such contributions will be replaced with a mandatory statutory levy. This will be applied at governmental level and imposed on all iGaming operators in the UK, while the amount generated on behalf of the UKGC will be invested into more extensive research, education and treatment for gambling-related social harms.

Once again, the precise scope of this levy and the form that it will take will be determined by a DCMS consultation, which will take place in the summer of this year. However, early reports have suggested that a 1% mandatory level could be placed on all iGaming brand’s profits, ensuring a steady stream of income in the UKGC’s coffers.

Like the proposed cap on slot betting limits, the full terms of this proposal have yet to be determined and will follow an in-depth and potentially protracted government consultation. However, it’s unlikely that a mandatory levy will have too significant or detrimental an impact on existing operators, many of whom are already more than happy to contribute to industry research into gambling related harms.

Introducing an Ombudsman for Dispute Resolution

For years now, responsible gambling lobbyists have called for an operationally independent gambling ombudsman to address complaints from online gamblers, whether they pertain to misleading bonus terms and conditions and issues surrounding the perceived withholding of winnings or similarly questionable practices.

A provision has been made for this in the iGaming white paper, which will look to establish an independent ombudsman within the industry. To begin with, commitment to the authority of the ombudsman will be voluntary, but if the proposal is not well received and the uptake is poor, the DCMS has pledged to step in to legislate participation.

Interestingly, the information collated by the ombudsman during the course of its work will enable the UKGC to enact more targeted enforcement activity, especially in terms of identifying and sanctioning non-compliant behaviour. The same datasets can assist the UKGC in their attempts to help vulnerable groups, including problem gamblers and underage players in the UK.

There remain some concerns about the scope of an ombudsman within the industry, with mandatory adherence to such a body likely to be resisted at least until the rules surrounding its powers and data collation are made clearer. Regardless, this is a deceptively impactful measure that will affect both casinos and sportsbooks, while changing the regulatory framework for all iGaming brands.

Advertising Measures and Restrictions

Advertising restrictions have also been a key focal point for responsible gambling lobbyists for years now, although they have historically focused on TV advertising and marketing campaigns. In fact, a number of iGaming brands actually announced a voluntary blanket advertising ban across all live sports broadcasts.

However, online brands spend the majority of their ad budgets on digital marketing channels, so a blanket TV ban did little to impact their reach or the effect of advertising content on customers. So, the recent white paper makes a provision for the UKGC to lead a consultation on more targeted and imposed restrictions, with a view to safeguarding customers across the board.

While such measures will most likely stop short of a complete advertising ban, the Commission will consider a wide range of customer-oriented controls,

including the ability to opt-in for online bonuses and promotions and a potential extension of existing self-exclusion tools available through GamStop.

At the same time, informational messaging about the effects of gambling-related harms will be made clearer and more robust, while this type of content will be shared more effectively. This is similar to the restrictions that were previously imposed on cigarette brands, which required companies to make the adverse health effects of smoking more prominent through both ad campaigns and packaging.

In terms of corporeal advertising and sponsorship, Premier League football clubs have already collectively agreed to withdraw gambling messages and branding from the front of clubs’ matchday shirts. In doing so, the EPL became the first sports league in the UK to take such a drastic measure, in order to voluntarily reduce the amount of gambling messaging associated with the competition.

Some gambling brands may have welcome this, of course, especially if such a voluntary measure encouraged the white paper to suggest less extensive mandatory action. However, much will depend on the Commission’s consultation and the eventual impact of restrictions on digital marketing efforts, as this is how brands attract and retain the majority of their customers.

The Last Word – What Are the Key White Paper Takeaways?

These measures also supported by other recommendations, including a proposed redesign of online game features that enhance risk (such as he ‘Autoplay’ feature that was previously available on slot games) and much tougher restriction on the VIP schemes that dominate iGaming revenues and put potentially vulnerable players at much greater risk.

Overall, the white paper is well-balanced and considered, while it looks to tread the middle ground between the demands of responsible gambling lobbyists and the expectations of the market leading brands. However, in attempting to tread such a fine line, the white paper runs the risk of satisfying no one and raising more questions than answers.

Of course, iGaming brands will be on tenterhooks as they await the result of various consultations recommended by the white paper, particularly when it comes to online slots betting caps and the precise terms of the industry’s new mandatory levy. Such consultations and their findings will have a huge bearing on the report is eventually received, especially for betting brands that are bracing themselves from a significant hit.

If flexible slot betting limits are rolled out (or the consultation suggests a maximum stake around the £15 per spin mark), for example, operators may feel relatively satisfied with the report. However, at least some customer demographics will see their maximum bets capped at just £2, impacting operator revenues across the board.

There also remain significant concerns about affordability checks, especially in terms of how they’re going to be conducted and managed by operators. Merely carrying out such checks has the potential to upset and deter the high rollers who contribute the majority of iGaming brand’s revenues, while arguably enhancing the appeal of black market and rogue operators.

These are all considerable points of interest, and it will be fascinating to see the precise recommendations made by the white paper and how they’re implemented. Then, we can appraise their impact over time, but for now, there’s no doubt that the document has sent ripples through the wider iGaming industry.