Home Insights & Advice How the online gambling industry is under threat in 2020

How the online gambling industry is under threat in 2020

by John Saunders
11th May 20 1:00 pm

At the start of 2020 the top brass at some of the world’s biggest gambling operators were looking at the UK market with some anxiety. After decades of extraordinary growth, calls for reform of the 2005 Gambling Act have reached fever pitch. Fears about an epidemic of problem gambling have been stoked by the media, and meanwhile regular stories of gambling firms being hit with massive fines by the industry watchdog, the Gambling Commission, are a sign of the turbulent climate that behemoths like GVC, Betfair Paddy Power and 888 are currently operating in.

And all this was before Covid 19 hit. Not only did the pandemic put an end to sporting events for the foreseeable future but it gave MPs in parliament a further argument for change – vulnerable problem gamblers locked away at home could be turning to casino and poker games as a relief from the boredom in a time of great stress and financial anxiety.

So, as we head into summer in one of the most extraordinary years in living memory for all businesses a new Gambling Act now more than ever seems inevitable. Already we’ve seen a ban on credit cards introduced this year, and now reformers are looking to turn the screw. New maximum stakes, deposit limits, bonusing restrictions and new rules to reduce the massive spend on sponsorship and advertising are all on the table.

Here’s a brief look at each of the areas under pressure for reform.

1. New maximum stakes on slots

In 2019 the big news was the reduction in the maximum stakes playable on Fixed Odds Betting Terminals (FOBTs) in sports betting shops. These games became known as the ‘crack cocaine’ of gambling after stories of punters losing £1000s every day became big news. Now attention has turned to the video slots available at casinos. These games are amongst the most popular online, out-performing some table games and even inspiring fan sites like this one where the latest games are listed next to the best sites and bonuses where they can be enjoyed. A cross parliamentary group of MPs is demanding the same FOBT max stake of £2 be introduced for slots too. Whilst for most players this won’t make any difference, operators will be acutely aware that some of their biggest customers like to wager at well over the proposed new maximum.

2. Restrictions on advertising

The proliferation of gambling advertising across the web, on TV and in sports venues, has led some to say that betting has become ‘normalised’ in the UK public’s minds, with the affect that no one thinks about the dangers it poses for those with an addictive streak, or for children who are not protected from seeing the advertisements that regularly pop up on social media channels without warning. More than half the football teams in the Premier League are sponsored by gambling firms, and total spend on advertising now exceeds £1.5 billion. It is likely that a new Gambling Act will bring in rules on where and when operators can market their brands. An all-out ban like we have seen for tobacco seems unlikely, but a ban on sports sponsorship, and on ads on social media will be on the cards.

3. New rules on loyalty and VIP programs

High rollers, or VIPs as they are sometimes known, are where online casinos and sportsbooks make their money. And when an operator sees someone who is spending big, they want to make sure that punter remains on their site. Bonuses, hospitality tickets at big sporting events, increased withdrawal limits and personal account management are all tools of the trade. But under new proposals, VIP schemes will be outlawed to avoid exploitation of problem gamblers who are lured into depositing more than they can afford. Stories of punters who spend £100,000s have been reported in recent years and a common feature of these tales is the friendly VIP manager dropping texts to their customers encouraging them back to the site whenever they try to take a break. Gambling operators will argue back but bonusing and VIP schemes will almost certainly be axed under new legislation.

4. Deposit limits and source of wealth checks

Amongst the most controversial proposals to come out of reform discussions is a limit on deposits each week and month. During the COVID 19 lockdown other European regulators have imposed strict limits on spend at online casinos, and there have been calls for the UK regulator to do the same. The Commission did not take the opportunity, but the issue will undoubtedly come up again in the months ahead. Deposit limits are usually mentioned in conjunction with Source of Wealth checks – a system by which an operator should be asking their customers to show that they can afford what they are spending. Whilst this impinges on privacy, some see it as the fairest way to mitigate the risk of problem gamblers getting into debt whilst allowing those who can afford it to gamble as much as they want.

After years of resisting change the gambling industry is belatedly waking up the idea that it will have to listen to the voices of those who say it needs to change. During the lockdown brought on by COVID 19 operators have introduced a self-imposed ban on TV and radio advertising. The Betting and Gaming Council have also published a 10-point plan for responsible gambling operations during the pandemic, including better promotion of deposit limits and visibility of GAMCARE messaging. They have also initiated voluntary reforms for 2020 including banning under 25s from VIP schemes and setting a minimum 2.5 second pause between slot spins.

Whilst these changes have been welcomed by those calling for a new Gambling Act, it is unlikely that they will prevent wholesale reform of the industry in this country including the measures outlined in this article. How far they will go, and the impact it will have on those businesses, time will tell, but expect it to be big.

Please play responsibly. For more information and advice visit www.begambleaware.org

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