The UK online gambling industry has experienced significant changes and this is expected to continue in the next five years.
This is linked to the government plans which aims at introducing a new taxation policy and the shifting industry regulations. Industry stakeholders and observers have agreed that the new tax policy termed “place of consumption (POC)” added with other changes in the regulatory environment will affect the overall cost of operation for gambling companies. Even though some large gambling companies may withstand the changes, there are small operators with lower operational margins that will struggle. Additionally, there is a possibility of market share consolidating. The new trends will affect the UK gambling market in different ways.
New Operational Policies
The UK government has over the years advocated for responsible gambling to protect vulnerable individuals and prevent cases related to fraud and money laundering. As a result, stricter operational policies have been introduced for both new and existing gambling companies. Part of the policy includes the use of GamblingAware whose mandate is to research and sensitize gamblers on negative aspects of the industry and provide preventive measures to those at risk. There is also the cap on gambling limits where the government reduced the maximum wager on fixed-odds betting terminals (FOBT) from £100 to £2. This has affected the profit ratio of betting companies.
Another operational policy that has affected the UK gambling sector is the recent introduction of regulatory bodies such as The UK Gambling Commission which monitors all casinos and gambling operations. With the introduction of regulatory bodies in the UK, no gambling entity can provide its services without acquiring the license. Ultimately, the cost of operation in the gambling sector has significantly increased.
The new tax policies have affected both the players and gambling companies in the UK. One of the policies introduced a 15% tax on all profits from betting. This worked in favour of the players since there are no deductions from their winnings. While the tax helps increase revenue collection by the UK government, it has affected the profitability of small and upcoming online gambling companies. The operators are more likely to pass these costs to consumers. Some may opt to compensate for the higher operational costs in the UK gambling market by cutting discretionary expenses like marketing, bonuses, and promotions. While the issue of taxation affects the financial aspects of the business, there has been a changed perception from the public on gambling as a whole. This is linked to increased revenue generated from taxation for infrastructural development.
Advancement in technology has affected almost all sectors, including the UK gambling industry. Through technology, players can easily check casinos on Gamstop to control bad gambling habits. As a free service, the platform has played an important role in achieving responsible gambling; it enables one to self-exclude from engaging in online gambling activities for some time. As of 2020, all gambling companies in the UK are required to enroll in the scheme. Due to this, players started looking for non Gamstop casinos in UK, because they not only give them more freedom, but also have better games and bonuses.
There is also an increasing penetration of smartphones and easy access to online gambling sites which has a positive effect on the market. Factors related to increased internet access in the UK and the availability of cost-effective smartphone devices have significantly contributed to market growth as the market share increases. More than 90 per cent of online casinos have designed responsive websites and can be accessed either through tablets or mobile devices; making gambling easier than before.
There are currently cheap Electronic Gambling Devices (EGDS) which are also easy to run and acquire. These devices have an in-build software and applications that imitates the experience of the local casino. Players do not have to visit a physical casino to learn and understand the games before playing. For instance, Video Lottery Terminal (VLT) applies advanced technology and can also be applied to slots machines, electronic poker games, and video slot machines. With the emergent of COVID-19 also, the demand for online gambling in the UK has increased.
Brexit, which is a major economic event in the UK has significant affected the gambling sector. Before it happened, the entire EU operated as a single market with uniform policies and laws guiding gambling. Players had the freedom of moving between European nations and could gamble without any issue. After the separation, the UK remained as a single entity and this meant new policies, regulations and reduced market share. As a result, most gambling companies with already established market share have moved to other nations to sustain their business.