What Will the Future be for Online Slots?

Posted by Harry Kane on Wednesday, August 25, 2021

There’s no doubt that online slots have been key drivers of the contemporary iGaming market in the UK, accounting for much of the double-digit growth that has followed over the course of the last decade or so.

In fact, it’s thought that slots account for more than two-thirds of the £1.9 billion GGY generated by online casino games, while this market share is continuing to increase every single year.

However, online slots could be under threat by a proposed betting cap, which would have a dramatic impact on operator turnovers. So, let’s take a brief look at the history of online slots in the UK, while asking what the future is likely to have in store for this vertical.

Tracing the History of Online Slots

Incredibly, it has now been more than 25 years since American entrepreneur William Scott launched the world’s very first real money casino in 1994, with this dominated by classic table game iterations, video poker and baccarat.

In fact, it wasn’t until early 1996 that the first online slot game appeared on the Internet, with the iconic InterCasino offering a games’ library that included 18 such titles. This is where the rich history of online slots began in earnest, with the InterCasino platform (which still exists to this day) blazing a trail for others to follow in the marketplace.

Many of these early slots were powered by the omnipotent Microgaming brand, which really began to dominate the marketplace in 1996 and remains synonymous with themes and creative slots in the digital age.

Make no mistake; Microgaming now has a slots’ library that features well over 800 titles, while the software house has also accomplished a number of firsts since its inception around 27 years ago.

In 1998, for example, Microgaming reached one such first by launching a seemingly innocuous slot game called ‘Cash Splash’. While this title offered nothing unique in terms of gameplay or graphics, it was incorporated alongside other slots as part of a wider network that would deliver a progressive jackpot to lucky players.

This type of progressive jackpot sees its prize fund grow and accumulate gradually over time, creating a scenario where players may eventually win a six, seven or even eight-figure prize. This fundamentally changed the slot gaming vertical forever, while Microgaming have subsequently paid out more than £1 billion in jackpots thanks largely to its network of progressive titles.

So, in addition to launching the first live real money slot, Microgaming is responsible for creating the progressive jackpot mechanism that has made online slots appealing to professional and serious gambler.

Slots became increasingly popular and lucrative through the noughties, before experiencing exponential growth post-2010. In fact, slot gaming activity is thought to have increased by more than 300% between 2010 and 2017, before further growth has seen it become the dominant online casino vertical.

This has largely been driven by innovation in terms of game development and the introduction of themed narratives, such as Game of Thrones (GoT) and The Dark Knight Rise.

This has helped operators to appeal across the boundaries of pop culture, increasing the popularity of slots amongst new, younger and casual players in the process.

What Does the Future Hold for Online Slots?

There’s no doubt that the UKGC is focusing on slots as part of their attempts to safeguard players, particularly given their highly immersive nature and the fact that you can wager as much as £500 per spin in some instances.

What’s more, the government may also be poised to legislate in this space, with members of the All-Party Parliamentary Group (APPG) for gambling-related harm having proposed a £2 wagering caps for online slots and similar verticals.

We’ll touch more on this below, but to provide some context, let’s take a look at how the most recent legislative changes impacted on fixed-odds-betting-terminal (FOBT) wagering in recent times.

In 2014, the David Cameron government commissioned a report into the social impact of gambling in the UK, with high-stakes FOBTs (through which players could wager up to £100 a minute) revealed to be particularly problematic.

After a period of review and consultation, during which the UKGC recommended reducing the maximum FOBT wager from £100 to £30, the government department for Culture, Digital, Media and Sport opted to introduce a £2 betting cap. This hard-line approach had a dramatic impact on sports betting operators, who were thought to have taken approximately 56% of their annual turnover in 2018.

The betting cap was finally rolled out in April 2019, with the contributing to mass store closures and job losses in the offline gambling industry in the UK. Multi-channel operators have also been compelled to accelerate their transition online, only to find that virtual slots and gameplay is now in the crosshairs of regulators.

But what would it mean if a £2 betting cap was introduced online? Well, there would only be a minimal impact on operators’ profits, as betting brands and online casinos would simply reduce their payouts in line with the new wager thresholds.

However, revenues would take a huge hit, creating a significantly lower online casino GGY and making the iGaming market considerably less appealing from an entrepreneurial perspective.

Similarly, slots would also lose the interest of high-rollers and VIP players, who tend to account for the vast majority of money spent with operators. However, there’s some good news in that the overwhelming majority of gamblers wager considerably less than £100 a month on average, so a reduced betting cap in unlikely to impact their experience too adversely.

The government will also have to think long and hard about how they regulate online slots and casino gameplay, however, especially with this established as a dominant source of tax revenue for the Treasury and one that has been increased in the wake of the aforementioned FOBT cap.