Gambling Reform Introduction
The process of reforming the 2005 Gambling Act began in 2020 and is ready to be debated in parliament. At least it was, before the machinations of the ruling Conservative Party decided to jettison its leader and Prime Minister Boris Johnson, throwing all pending legislation into limbo. The 2005 Gambling Act was one of the most radical relaxations of gambling laws in British history. The main three aims were to keep gambling out of the hands of criminals, make sure the gambling industry was fair and open and to protect children and other “vulnerable persons”.
As the internet revolution continued apace, through the introduction of smartphones and social media it became clear that the industry was no longer equipped to deal with the various challenges of the digital age. When the maximum bet on Fixed Odds Betting Terminals (FOBTs) was reduced from £100 to £2, it was clear that the winds of change were truly blowing and that wholesale reform was required.
What is the White Paper?
Although the White Paper was touted to be published in July 2022, we will have to wait until, probably September or October 2022 to see all the details. However, UK gamblers do know some of the proposals that can significantly change the gambling sites landscape.
Affordability issues will almost certainly be at the heart of the White Paper. Proposals to make checks mandatory after £125 has been deposited are likely to be included. This is a significant shift from anything we have seen before. To be clear, this is referring to all deposits made via debit cards and e-wallets, not simply credit accounts. Indeed, the use of credit cards to deposit funds has been banned for a number of years now. The checks will take the form of players having to submit documentation showing they can afford the amount they are spending. This Source of Funds (SOF) requirement is already common practice in many betting companies, keen to stay ahead of the game. It is not clear the impact this has had on their revenue or growth.
Further affordability checks are also due to be enforced when a player loses more than £2,000 in a 90-day period. It is expected that these “harder” checks will inevitably leave some form of credit history footprint, jeopardising an individual’s access to mortgages, loans and other financial products. Many in the betting industry fear that a substantial percentage of punters will be put off wagering entirely if this change happens, regardless of how much money they earn or are willing to gamble with.
“Slot Caps” are another expected change, reducing the permitted maximum online stake for slot games to around the £2-£5 mark. This can affect many of UK’s best slot sites like Mr.Play and their revenues. This may then go up to £10-£25 after affordability checks, but this would still be a major reduction, along the same lines as the FOBT reduction brought in for betting shops.
Banning VIP Schemes and loyalty bonuses is another aspect of the White Paper that is likely to stay. The ability of online betting firms to look after their best clients (i.e. those who lose the most money) has always been an important part of their PR. Under this legislation, individual players would no longer be able to receive rebates on losses, trips to major sporting events or even a Christmas hamper.
Betting offers such as Free Bets are also to be monitored under the proposals. Several of the hefty fines handed out by the Gambling Commission in the last few years have specifically criticised the indiscriminate use of free bets, particularly when targeting problem gamblers or those who have shown signs of problem gambling. Free bets have always been a key part of an online betting sites’ armoury when trying to attract new punters in a crowded market, and this is a significant change.
How could the White Paper affect punters?
Clearly any credit checks will be a barrier to players and companies alike. Whether it comes down to issues of credit or the invasion of privacy, many current and potential customers will be put off from wagering. Those that don’t pass the intended credit checks will also, naturally, wager less than previously.
How could the change affect betting companies?
Betting industry sources estimate that if the White Paper proposals are introduced it will cost between £20 and £30 million a year. The knock-on effect on affiliate schemes, which are reliant on start-ups finding as many new players as possible, will clearly be significant and could lead to a number of online casinos closing (Cloud Casino left the UK gambling market) and many new casinos not getting the green light.
The state of the racing industry in the UK is already a topic of much debate and industry sources feel the White Paper could have a “drastic impact” on an already-ailing sector. Attendance on course is well down, as is revenue, and many of the 50-odd racetracks in the UK could come under serious pressure.
Essentially, we are waiting to see what happens with the Conservative leadership before we can make any firm conclusions. The “Red Wall” Conservative MPs represent some of the most deprived parts of the UK and some of those most affected by problem gambling. They are certain to hold the new Prime Minister’s feet to the fire when it comes to pushing the White Paper through. However, given the current cost of living crisis and the generally dire financial forecast facing the UK government (and treasury), the potential loss of gambling revenue could lead to the proposals being kicked into the long grass or certainly watered down. We will know very soon.