The £100 Spending Cap – Is it a Viable Option?

Posted by Harry Kane on Tuesday, October 27, 2020

We recently posted about the significant regulatory proposals that have been put forward by the All-Party Parliamentary Group for gambling-related harm, including a controversial £2 online betting cap that would mirror the measures put in place for FOBT gambling offline.

Interestingly, other think tanks and responsible gambling lobbyists are also putting forward their own ideas for future regulations, some of which may be more palatable to operators and others that may appear even more dramatic.

One of the most thoughtful think tanks is the Social Market Foundation (SMF), which is active in an array of areas and has recently released a new report on iGaming. We’ll explore the main points of this below, including the proposal of a £100 spending cap for each individual player.

How Would a Monthly £100 Spending Cap Take Shape?

This is an intriguing regulatory proposition, and one that will ultimately be more appealing to operators than a blanket £2 betting cap across all online verticals.

So, how exactly would such a spending cap work? In simple terms, it would impose a £100 betting cap during each four-week period, with this equating to a maximum spend of £23 per player every week.

For individuals who wanted to wager more than this amount on a weekly or monthly basis, they would have to agree to so-called ‘affordability checks’, which would be carried out directly by the operator according to strict regulatory guidelines.

In this respect, the proposal would represent something of a soft cap, with players able to wager more than this in instances where they’re able to showcase their earning and prove that they could afford to lose a fixed amount of capital without encountering hardship.

The SMF prefers this to an arbitrary online betting cap, as the group believes that this should vary from one discipline and vertical to another.

For example, the think tank would support the implementation of a spending cap alongside an online slots stake limit of between £1 and £5, whereas non-slot games should instead face significant design changes and restrictions that automatically reduce the amounts consistently wagered by players.

Once again, this would most likely be more appealing to operators than many of the similar proposals put forward by the APPG for gambling-related harm, as it affords them greater flexibility and the ability to empower high-stakes gamblers as long as they meet affordability and current viability checks.

Beyond these quite precise measures, the SMF has also called for a sweeping overhaul of iGaming taxation, primarily in a bid to compel brands who are registered abroad to bring their operations fully into the UK.

Interestingly, this report and its findings have come ahead of a government review of the 2005 Gambling Act, which ministers have repeatedly promised to overhaul and described as being “analogue legislation in a digital age”.

Are Such Proposals Viable from the Perspective of Operators?

Let’s face facts; any type of regulatory or legislative intervention is likely to be resisted by operators, particularly given the extent of the aforementioned proposals and the potential for further interference in the future.

However, there’s no doubt that the measures recommended by the SMF are more palatable in the current climate, especially as there’s a mechanism through which operators can make exceptions for wealthy players who can prove both their source of income and ability to absorb specified losses.

This is an important consideration, particularly when you consider both the industry’s reliance on big spending (or VIP) players and the role that VIP schemes tend to play in the regulatory penalties commonly imposed on brands by the regulator.

When it comes to the former, a recent report from the Gambling Commission showed that the market leading brands in the UK took a disproportionate amount of their revenue from a vanishingly small number of players.

For example, one anonymous brand took 83% of all deposits from 2% of its customers, while one of the company’s rivals took 58% of its revenue from 5% of its overall consumer base.

A third claimed 48% of its turnover from just 3% of players, and this highlights a clear trend which shows that high-rollers are central to the success of the biggest iGaming operators.

Conversely, the awarding of VIP status to aforementioned high-rollers has been cited as a factor in seven out of 10 regulatory penalties issued to companies by the UKGC since 2018, so there’s a clear balance to be struck by operators and the Commission when managing such schemes.

However, the proposal by the SMF would help in both of these respects, as it would enable high-roller casinos to maintain a reduced base of high-rolling players while simultaneously eliminating those who are unable to fund their gambling activity and ultimately avoiding the threat of future sanctions by the UKGC.

As a result, operators would be able to maintain a viable revenue stream without risking the safety of their players, creating a foundation for sustainable growth even in a fast-changing marketplace. It should also be noted that the vast majority of gambler’s wouldn’t be affected by a £100 spending cap, as they wager well within this limit on a monthly basis.

A variable betting cap across different verticals would also be preferable to one blanket restriction, as it would help brands to factor in the amounts typically wagered during specific games and the revenue that they generate.

The idea of redesigning various casino games as a way of organically reducing spending is also appealing, particularly as this won’t have an overt or conscious impact on the typical gameplay experience. After all, casino games subliminally use colour and audio to replicate the immersive nature of corporeal gambling, so removing these subtle incentives could well help players to manage their spending more effectively.

With these points in mind, it’s crucial that operators take a proactive approach and continue to liaise with think tanks, regulators and the government alike, so that they can take control of their own destiny and help to shape a regulatory landscape that allows for both growth and safeguarding.

Otherwise, it will be left solely in the hands of the government, who are likely to impose strict and inflexible laws that could ultimately decimate the industry.