Why the Stakes Are High for Online Gambling

Posted by Harry Kane on Monday, July 16, 2018

When the UK Gambling Commission (UKGC) announced that the protection of vulnerable gamblers would be one of their core strategic objectives through 2021, it was initially unclear how they would attempt to achieve this goal.

After all, the issue of regulation is a delicate one in the gambling industry, as there is a pressing need to protect the interests of players while also enabling operators to generate a profit.

Given this, and with the overall sector having generated in excess of £13 billion in the financial year ending 2017, both government and industry regulators are required to tread carefully when overseeing the gambling experience available to players.

This is why the stakes are high for the industry (and online gambling in particular), as operators look to comply with new regulations and the UKGC attempts to balance the needs of players and the UK market alike. But could thoughtful regulation actually be beneficial to the industry, and if so why is this the case?

Could Regulation Hold the Key to Future Market Growth?

Like ‘audit’, the world ‘regulation’ often sends a shudder down the spine of operators in any marketplace. It’s important to note that regulation is an agile that means something different depending on the context in which it is applied, however, and the precise industry that it is designed to serve.

Look at cryptocurrency, for example, which underpins a market that is set to achieve a cumulative value in excess of $1 trillion before 2018 is out. This industry now boasts a vast array of diverse of currencies that are traded across the globe, and despite this there is little or no regulatory guidance to effectively safeguard investors.

As a result, there’s also a notable lack of uniform regulatory measures to drive best practice in the sector, and this leaves investors vulnerable to the market manipulation and sustained volatility that ensures.

This is why the market leaders in this space actively champion the introduction of stringent and consistent regulations, while it also explains why a growing number of companies are launching so-called ‘stablecoins’. This price-stable currencies peg their value to more established assets such as gold or the U.S. Dollar (USD), minimising price movements in the process while actively negating the absence of central regulation.

A similar principle can be applied to the gambling industry, particularly a virtual space that is more accessible to underage or vulnerable players. After all, by encouraging progressive regulatory measures and proactively applying with these, forward-thinking brands would have a unique opportunity to increase their market share and establish themselves as modern ambassadors for responsible gambling.

This is why a number of prominent chief executives within the market have already voiced their unwavering support for the UKGC’s decision to safeguard vulnerable players, while also welcoming tighter regulation and control of the sector as a whole.

Ultimately, effective regulation is an area in which the industry has historically fallen short, with these failings being amplified in a digital age where both young and vulnerable players have almost unrestricted access to virtual casinos.

With the prevailing outlook changing among operators, however, it’s becoming increasingly clear that tighter regulations are pivotal to the growth of the gambling industry as a whole.

How Can Operators Move to Protect Their Players?

With online gambling now accounting for 34% of all industry activity, there’s no doubt that the stakes are particularly high for virtual operators.

More specifically, unless operators collaborate with regulators to help formulate new measures and then adopt a proactive approach to compliance, the future growth of the online gambling sector could be called into question.

This has been borne out recently, with online operator 32Red fined a hefty £2 million for missing numerous opportunities to help a problem gambler who spent dramatically outside of his means while depositing a staggering £758,000 in barely two years as an account holder. Here we have an example of a brand failing to buy into the regulator’s measures and drive compliance, and this type of occurrence is simply unsustainable if the industry is to drive future growth.

The good news is that operators already have the tools to safeguard online players, with a particularly all virtual activity is account based and recorded. So, by investing in big data and advanced analytical tools, operators can harness this information to identify individual player behaviours and tailor their communications accordingly.

This type of approach can certainly help to set individual betting thresholds for players based on their earnings and activity, while also enabling operators to ensure that potential problem gamblers are not aggressively targeted with promotional offers. This was an issue in the 32Red case, where the operator continued to share lucrative promotions with the player in question and even afforded them VIP status.

This also ties into the regulator’s national self-exclusion scheme GAMSTOP, which has been designed to help problem players assume control of their activity and stop operators from communicating with them. Although there have been significant issues with the scope of the software and its effectiveness across the length and breadth of the marketplace, this offers a unique opportunity for operators to work closely with the UKGC and help resolve some of the core technological issues.

The same principle can be applied to privately developed self-exclusion schemes, while some operators may even consider developing their own initiatives to protect players.

The key point here is the importance of collaboration between operators and regulators, as this will help to create more effective legislation and increase the likelihood that brands will achieve long-term compliance.

The Last Word

As the recent FOBT cap highlighted, an increase in industry regulation is already raising the stakes for gambling operators in both the corporeal and virtual realms.

By embracing more stringent regulatory measures and striving to achieve the delicate balance between profitability and player safeguarding, however, operators can benefit significantly while also improving their standing in the market as a whole.

This will require a collaborative approach between operators and regulators, and one that influences the development of new legislation and future compliance. Nowhere is this more true than in the online marketplace, which will ultimately determine the success or failure of the industry going forward.