The Stakes are High in the UK Gambling Reform White Paper

The Stakes are High in the UK Gambling Reform White Paper

Last month saw the long-awaited publication of the Gambling Act Review White Paper by the Department for Culture Media & Sport (DCMS). The white paper set out the UK government’s plan for gambling regulation reform following the review of the Gambling Act 2005. But what exactly are the changes that have been outlined since the publication of the original act eighteen years ago, and what does it mean for the future of gambling and iGaming in the United Kingdom?

What’s New?

After much speculation, rumour and lengthy delays, the white paper became available in the public domain on the 27th of April. Over two years in the making, the paper sets out a variety of changes that will affect all areas of iGaming and gambling. Many of the proposals are subject to further consultation, though the government expects most of them to be in place by summer of next year.

The UK Parliament website listed the following questions as ‘Calls for Evidence’ in relation to gambling regulations:

1. What is the scale of gambling-related harm in the UK?
2. What should the key priorities be in the gambling White Paper?
3. How broadly should the term, ‘gambling’, be drawn?
4. Is it possible for a regulator to stay abreast of innovation in the online sphere?
5. What additional problems arise when online gambling companies are based outside of UK jurisdiction?

The DCMS called for written evidence in response to the questions in relation to the white paper.

The Rt Hon Lucy Frazer, secretary of state for the DCMS, gave outlines for the main five terms that would be addressed, these included; affordability checks, protection for the vulnerable, resources for the Gambling Commission, protection of children, and addressing the land-based industry. The main focus was on protection for vulnerable groups, which inevitably led to one side stating the changes were too harsh and the other saying they were not enough.

A surprising element was the announcement to instigate a new gambling ombudsman as a single point of contact for all industry queries, as already happens with other industries.

The updated paper is mostly aimed at addressing the changes to the gambling industry since 2005 and how operators can address the related issues, particularly regarding the blossoming of the iGaming industry.

Ms Frazer stated that “A number of assumptions which prevailed at the time of the 2005 Act now look increasingly outdated, so we plan to rebalance regulation and remove restrictions which disadvantage the land-based sector.”

She continued, “Gambling is an adult activity and it must remain an adult activity. That is a major reason why I applauded the decision taken by the Premier League to remove gambling sponsorships from their shirt fronts in the coming seasons. And it is the same reason we are ensuring children can do no forms of gambling either online or on widely accessible scratchcards.”

The Gambling Act Review White Paper in a Nutshell

Affordability

• Affordability checks, if £1,000+ is lost in 24 hours or £2,000+ is lost within three months, for those aged 25+.
• More stringent affordability checks with lower limits for those aged 18-24 years, with triggers to be half that of the over 25s due to the increased risk of harm.
• Unobtrusive checks for players whose loss exceeds £125 each month or £500 a year.
• Data sharing on high-risk online customers will be mandatory.

Stakes

• Slot stake limits will be introduced after more consultation, ranging between £2 and £15 per spin.
• New accounts will have lower thresholds put in place.

Ombudsman

• Independent gambling ombudsman created to address complaints.
• The GB Gambling Commission to collate data from the ombudsman to support vulnerable groups and target key areas.
• Initially, the ombudsman will be voluntary but it may be legislated if the move is not well-supported.

Advertising

• A consultation will take place regarding opt-in for bonuses and other offers.
• Review wagering requirements to ensure they do not encourage problem gambling.
• Stronger messaging on gambling harm will be in effect.

The Gambling Commission

• Tougher restrictions for VIP programmes.
• Third-party white-label casinos will need to abide by new, reinforced regulations.
• Prize draws, tournaments and competitions will be under scrutiny.
• A review of rules on design features for online games will explore increased risks with certain features.
• The Gambling Commission’s funding will be addressed to ensure changes can be made and upheld.

Funding

• Funding for research, education and training will be taken from a mandatory levy paid by operators to the GB Gambling Commission. The consultation will begin this summer.

Land-Based Casinos

• Under 18s to be banned from all category D gaming machines (fruit machines).
• The age verification slogan ‘Think 21’ may be changed to ‘Think 25’ to reduce harm.
• Sports betting will become available in casinos.
• Consultation regarding the use of contactless payments will take place.
• Casinos can increase the number of slot machines available with a 5:1 ratio for slots to table games, with increases from 20 to 80 being available for some casinos.
• Smaller casinos can provide extra slot machines on a pro-rata basis, determined by the size of the casino and the non-gambling floor space.
• Dormant licences are to be relocated to other local authority areas.
• High-end casinos will be able to offer credit facilities to non-resident high rollers.

The Black Market

• The current voluntary agreement with payment providers to block illegal operators will probably be made statutory so that court orders can force providers to block the sites.

Land-Based V iGaming?

At a glance, the paper will be good news for the land-based industry. The addition of sports betting, increased fruit machines, cashless systems, credit availability and so on will draw more people back into physical casinos and boost the economy and leisure industry.

It’s clear, even to someone with only a rudimentary knowledge of the iGaming world, that online gambling is, on the other hand, not going to fare so well. Increased restrictions, limits to players, harsher checks, heavier fines and tighter laws will all serve to dissuade potential new online platforms and turn players away.

The past five years have already seen many previously significant online platforms withdraw from the UK and the white paper, and changes such as banning premier shirt advertising and increasing lottery sales to those aged 18+, are not going to help matters. Simply look at the number and names of online betting platforms in the UK only five years ago and the stark reality of the number of names that don’t even exist anymore, simply because the pressure to abide by harsher and harsher rules became too much.

Platforms will need to make sure they have a knowledgable, diligent and proactive compliance and law team onboard who can address the changes and keep on top of potential pitfalls. Not a cheap or easy feat for small businesses by a long shot.

Reactions to the White Paper

Reactions to the publication were mixed on both sides of the argument. Chair of the gambling-related harms All-Party Parliamentary Group (APPG), Carolyn Harris, welcomed the new measures in relation to the APPG report of iGaming harms released in 2020.

Ms Harris stated that “We need swift action, immediate implementation of the proposals and urgent legislative change where it is necessary after 18 years of the gambling industry’s dominance over this agenda.”

However, the shadow DCMS minister, Alex Davis-Jones, said although she welcomed the paper she still had concerns and commented that, “The government has delayed this white paper many times. Everything they’re announcing today was ready to go a year ago. Six gambling ministers, and four culture secretaries all promised to publish this white paper imminently.”

Clearly in the corner of the responsible customer, Conservative MP, Phillip Davis, pondered ‘the number of regular punters’ ministers had consulted with prior to the paper’s release. He queried, amongst others, the threshold for checks as losses of £2,000 in 90 days amounted to approximately £22 a day.

Mr Davis showed his antipathy stating, “The Conservative Party used to believe in individual freedom and individual responsibility, but that seems to have gone out of the window with these affordability check proposals.”

With the current cost of living in the UK at an all-time high, is the minister out of touch with regular people or simply standing up for personal freedom?

The Conservative MP for Shipley, Philip Davies, spoke out against increasing restrictions for under 25s, “It amazes me that the people most in favour of reducing the voting age to 16 are the biggest cheerleaders for curbing people’s right to bet until they are 25. Either those people are responsible enough to make decisions for themselves or not. We decided in this country many years ago that 18 was the appropriate age to treat people as adults. I don’t like this infantilisation of young adults.”

Ian Proctor, Chairman of Flutter for the UK responded, “The impression from ministers is that everyone is a problem gambler. That is the tone. And personally, I find that disappointing.”

However, there are still strong calls for a total ban on gambling advertising in the UK from vocal charities and notable celebrities. Will their influence win over in this important debate?

What Does the Future Hold?

There are legitimate concerns about the future of the gambling and iGaming industry in the UK. While National Lottery sales reached  £8.29 billion in 2022-2023, even with the age increase, other areas weren’t so lucky.

Horse racing has been hit hard, losing £40 million in revenue partly due to the delay of the white paper and officials are concerned about the impact of harsher affordability checks. While big-name operator Entain reported a massive loss of £100 million due to a steep drop in gambling activity as a result of the UK Gambling Commission’s restrictions.

The UK in Numbers

• The gambling industry made around £10 billion before tax in 2021-2022 (excluding the National Lottery).
• £6.4 billion in profit was from betting, casino and bingo, mostly in iGaming.
• £3.5 billion was made in land-based casinos, arcades, bingo halls and bookies.
• The gambling industry paid £3.2 billion to the Office for Budget Responsibility in tax in the 2021/22 financial year.
• There are estimated to be between 250,000 and 460,000 problem gamblers in Great Britain.

It seems that things will not be getting easier for operators in the UK anytime soon. Big names may still make a decent profit, but small-scale platforms would look better to moving their business elsewhere.

Get Into iGaming in Emerging Markets

With the tumultuous upheaval underway in the UK, that does not look set to slow down anytime soon, will we see an even sharper increase in the surge of platforms being created in emerging markets?

More and more people are turning away from Great Britain and instead looking towards places such as Brazil, India and Africa as an alternative location to launch their new iGaming business. It’s certainly less daunting to get a new platform off the ground in the LatAm market compared to many European countries. Less restrictions equals easier start up.

If you’re thinking of breaking out into iGaming, WeAreGame specialises in emerging markets, with Nigeria, Brazil, and India being just a handful of our iGaming areas of expertise. If you want to know more about starting your own iGaming business, or expand your current brand with our platforms solutions, get in touch: hello@weare.game

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