What Challenges is the iGaming Industry Facing?
Posted by Harry Kane on Friday, December 8, 2023
Notwithstanding the usual peaks and troughs, it appears as though nothing can stop the relentless growth of iGaming and remote betting in the UK marketplace. To this end, the online casino GGY on these shores peaked at £6.4 billion in 2022, despite ongoing regulatory challenges.
However, high growth markets of this type come with their own set of problems, some of which have inspired the UK government and UKGC to carry out a comprehensive iGaming review and make some transformative recommendations. But what are these challenges and what exactly do they tell us?
#1. The Issue (and Myths) of Problem Gambling
Let’s start with the most obvious issue, which is that an increase in iGaming activity (both in terms of the number of online players and the amounts of cash wagered) naturally creates a heightened risk of problem gambling. However, estimates about the scale of this issue vary wildly, while it’s unclear whether this has increased in line with rising online account numbers.
According to the most recent Gambling Commission figures, approximately 0.5% of the adult population has a problem with gambling. A further 3.8% are supposedly at risk of becoming problem or compulsive gamblers, while 7% are reportedly impacted negatively by the actions of loved ones who wager regularly.
However, a 2020 YouGov treatment and support survey reported that a staggering 13% of the population were experiencing gambling-related harm. However, this number is significantly higher than both the UKGC findings and a more recent report from the HSE, which found that 4% of respondents in England, Scotland and Wales are showcasing compulsive behaviours.
The latter two reports appear to be more accurate, especially as it’s unclear how the 2020 YouGov poll measured and quantified gambling-related harm. What’s more, further studies have found that the average Brit gambles just £2.60 per week (or approximately £135.20 per annum), while the VIP quota at online casinos rarely exceeds 1% or 2% over the total consumer base.
If we accept that the actual number of problem or at-risk gamblers in the UK equates to between 3.8% and 4% of the adult population, it’s also interesting to note that this figure hasn’t increased exponentially over the course of the last decade. It certainly hasn’t risen at the same pace as the iGaming GGY or number of online accounts, which suggests that the responsible gambling measures put in place by the UKGC are proving deceptively effective.
However, while this issue is occasionally misrepresented and exaggerated by iGaming critics, it’s still a problem that needs to be consistently measured and reviewed. Any counter measures must also be revised as the challenge evolves or changes, especially as it becomes easier to access iGaming platforms and the true impact of gambling-related harm becomes more apparent.
#2. The Rise of the iGaming Black Market
Another side effect of a high growth industry is the rise of black-market activity, which has always been prevalent in the iGaming vertical. Of course, the size of the black-market is also impacted by the regulatory challenges facing licensed casinos and sportsbooks, but we’ll touch more on this a little later in the piece.
Of course, individual events can also cause spikes in black-market activity. For example, the number of UK punters that visited unregulated online bookmakers tripled during the 2022 FIFA World Cup, with some 250,000 visiting black-market betting sites in December 2022 alone. This was compared to just 80,000 during the same month the previous year.
Analysts also found that the flow of online traffic to sites that advertised betting verticals to problem gamblers who had previously self-excluded soared by 83% during the same period. Currently, all licensed and regulated betting sites are signed up to the self-exclusion GamStop initiative, but the same cannot be said for black-market operators.
Obviously, seminal and global events such as the World Cup will trigger spikes in black market activity. However, it’s also true that the popularity of unregulated operators has increased as the licensed market has grown and faced a more stringent set of rules, and this means that bodies like the UKGC face a difficult challenge to combat this in the near-term.
For example, the UKGC has implemented a number of regulatory changes in recent times, from the ban on credit card usage to newly imposed limits on spin speeds when playing slots. Freshly suggested proposals also include affordability checks for younger or high rolling players, all of which have the potential to restrict the gameplay experience (or overall accessibility) and encourage bettors to seek out rogue casinos or sportsbooks.
While these proposals are well intended and have various degrees of success when it comes to safeguarding players, they also have the potential to trigger spikes in black-market activity. This is something that regulators need to be aware of, as they look to create safe and protected markets that also allow for commercial growth and enjoyable iGaming experiences.
#3. Data Accessibility and Collection
Even if you’re like the majority of UK gamblers and don’t suffer from compulsive gambling behaviours (or have a desire to wager at a black-market betting site), wagering your hard-earned cash requires you to submit a significant amount of your personal and financial data to online operators.
The amount of data now held by iGaming brands is huge, with much of this collated when you sign up for an account. Then you’ll have to store sensitive financial information pertaining to your chosen deposit and withdrawal methods, while the collation of this data raises two significant risks.
Firstly, even if your preferred casinos or sportsbooks don’t sell the data that they collect to third parties, this could still be harvested by unauthorised users if the site’s security is breached. This threat is compounded by the fact that the average Brit has approximately three online casino accounts, so your information could be at risk through multiple sources.
Secondly, the current data protection laws don’t stop online casinos from conducting financial risk checks on its players. At the same time, the introduction of increased affordability checks could force players to provide even more data to casino brands, and while such practices are carried out transparently, this can still put your sensitive information outside of your control.
Overcoming these challenges can be difficult, especially as we live in a data-driven world where our personal information is more valuable than ever before. So, you’ll need to take steps to secure your data where possible, while using a VPN on your chosen device and ensuring that you wager at a licensed casino brand.