The past few years have been a dynamic period for the UK gambling sector. Various changes are being brought to life by local regulators, with 2017 and 2018 being marked by successful performances of gambling operators. Currently, the gross gaming yield of the British gambling industry is estimated to approximately £14 billion, and online gambling accounts for about £4.7 billion of the overall amount.
Apart from registering a stable gambling revenue increase, 2018 has also posed some challenges to the operators, because country’s legislators realised that the great success of companies, measured in growth and prosperity, has been hurting local gamblers, their families and even entire communities.
As a matter of fact, the UK has been facing a serious crisis due to constantly increasing gambling participation and problem gambling rates, which turned into some of the main reasons for legislators to make a step towards changing the UK gambling laws. A number of bills, which are expected to take effect as early as 2019, have been passed by the country’s gambling regulators in 2019.
FOBT Maximum Stake Reduced to Tackle Gambling Addiction Rates
Following a lengthy review and waves of criticism, in May 2018, the Department for Digital, Culture, Media and Sport (DCMS) finally revealed a decision to slash the maximum wagers allowed at fixed-odds betting terminals (FOBTs) from £100 to £2.
As Casino Guardian reported at the time, FOBTs have been pointed as some of the greatest evils in the UK gambling industry and as a key reason for constantly increasing problem gambling rates, especially in disadvantaged communities. According to anti-gambling campaigners, thousands of people nationwide have been affected by negative consequences related to the notorious machines, with gambling addiction rates constantly increasing in the country.
The Association of British Bookmakers (ABB) has noted that the reduction of the maximum stake would probably hurt the performance of gambling operators and tried to require a delay of the new policies, saying that businesses would need extra time in order to adjust to the changes of the status quo. UK gambling companies also warned that the FOBT maximum stake reduction could lead to closures of high-street betting shops and massive layoffs across the industry.
Despite the fact that the HM Treasury revealed expectations that it could lose over £100 million on an annual basis as a result of the reduction of the FOBT maximum stake.
Until recently, the Government was ready to provide operators with the required delay, giving gambling companies until October 2019 to adjust their operations to the new requirements. However, the announced postponement fuelled a massive outrage among communities, anti-gambling campaigners and even Members of Parliament. As we have previously reported, the delay even led to the resignation of the then-Minister of Sports and Civil Society, Tracey Crouch, who was one of the most eager campaigners against the detrimental impact of controversial machines. Following the ubiquitous grudge faced by the UK Government, the British lawmakers finally decided to stick to the initially-announced date for the implementation of the reduced stakes. Several weeks ago, the Government announced that the reduction is to be officially made in April 2019.
2019 to See Point-of-Consumption Tax Increase
Currently, gambling operators in the UK are required to pay a 15% point-of-consumption tax, which was originally introduced in 2014 as a way to tax British players using foreign online casinos.
However, the UK Government is trying to compensate for the losses that it is to suffer due to the fixed-odds betting machines’ maximum stake reduction. This has been one of the main reasons why local lawmakers decided to boost the tax to 21% so that the contributed amount makes up for the losses caused by the cuts, which according to some estimates would cost the exchequer more than £1.10 billion over a five-year period.
Several gambling operators have explained that the tax increase is too big for them to deal with. The companies said that it would put too much pressure on them, which could force them to raise the prices in order to compensate for the expected losses themselves. Of course, when combined, general legislation changes such as the FOBT maximum stake reduction and the increase of the gambling tax are considered a change too radical for such a short period of time.
Still, despite the problems which UK gambling operators are expecting to face, the Government has revealed that the new point-of-consumption tax would help it provide all gambling companies which operate in the UK with equal opportunities. The HM Treasury revealed that the implementation of the new gambling tax rate will take place in 2019.
More UK Gambling Operators to Eye US Expansion
2018 has seen a number of leading UK operators turn their eyes to overseas markets, and more specifically, to the US gambling industry, seeking further growth and stability.
As mentioned above, some of the companies have described the upcoming changes in the UK gambling legislation as a massive blow for their performance. The change in the regulatory regime has pushed some operators to seek other options in order to compensate for the negative consequences which FOBT maximum stake reduction and larger gambling tax implementation will have for them.
After the US Supreme Court finally lifted the federal ban on sports betting, the sector has become even more attractive to UK gambling companies which are interested in expansion at a time when sports betting has already started spreading across the country.
Several companies have already announced steps to big US expansion, but their number will probably rise in 2019 with more states expected to officially legalize sports betting.
Shortly after the US Supreme Court’s decision to allow sports betting in the country, the owner of Ladbrokes – GVC Holdings – confirmed a 50:50 venture with MGM Resorts, with the deal being estimated to more than £150 million (about $200 million). The agreement catapulted the UK gambling group to the newly liberalized sports betting market of the US providing it with access to many potential customers.
The beginning of September 2018 saw William Hill enter a partnership with Eldorado Resorts, a US casino firm – a deal that provided one of the largest gambling operators in the UK with access to 23 million customers. The agreement has made William Hill the exclusive sports betting and online gambling partner of Eldorado Resorts. The latter currently operates 21 casinos on the territory of the US and is proceeding with its planned expansion. Then, in October, the company significantly expanded its presence in the sports betting sector thanks to the deal agreed with the regional casino operator Golden Entertainment.
A few months later, in December, the gambling operator 888 also revealed an expansion of its operations in the US by taking full control of All American Poker Network (AAPN). The deal is expected to help the company extend the reach of its 888casino and 888poker brand and boost its growth rates.
Considering the fact that the US gambling sector has been a lucrative one for many companies from across the world, the UK gambling operators’ expansion into the US industry is expected to continue in 2019, with more operators getting a presence there.