Important Changes in The UK Online Gambling Industry

How the UK Gambling Regulator Toughened Its Stance to Protect the Vulnerable

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The United Kingdom has gone through a long and thorny path to properly regulate its gambling industry. Following the implementation of the Gambling Act 2005, the authorities established a regulatory regime that governs the provision of gambling activities throughout the country and charged the UK Gambling Commission (UKGC) with the task to monitor and support the implementation of the established regulations.

Currently, the UK gambling market is touted to be one of the most lucrative in the world. Industry experts claim that the well-regulated gambling market in the UK is a win-win as it protects the players’ best interests and also attracts fresh money flow.

legalisation

The legislation that governs both land-based and remote gambling is the Gambling Act 2005. Its main objective is to prevent the industry from criminals, ensure that gambling activities are conducted transparently, and protect vulnerable individuals from gambling-related issues. Under the Gambling Act 2005, UK residents above 18 years old are allowed to gamble and winnings are free of taxes.

The act defines 6 main kinds of gambling, including arcades, betting, bingo, casino, lotteries, and gaming machines. All casinos must hold a license issued by the Gambling Commission. Operators need to comply with certain rules regarding the location and the kinds of games they are allowed to offer.

Fixed-odds and pool betting are also legal forms of gambling and the UKGC is responsible for overseeing this branch of the industry. The situation with the arcades is more complicated as the law distinguishes 3 types of arcades, and more precisely adult gaming centres (AGCs), licensed family entertainment centres (FECs), and unlicensed family entertainment centres (UFECs).

Slots, fruit machines, and betting terminals are often to be seen across the UK. The betting shops that offer such gaming machines need to have licenses to operate. The UKGC demands from its licensees to display the odds and return to the player (RTP) of each game.

The UK’s National Lottery has been offering its services since 1993. Under the legal framework that governs this facet of the gambling industry, 28% of lottery prize pools go for charitable causes. The state receives 12% of the prize pool and 15% goes towards the costs of running the lottery and selling tickets.

Sports betting is yet another gambling branch that is legal in the UK. Land-based sportsbooks have been allowed to operate since 1960 when the authorities passed the Betting and Gaming Act. As for now, the sports betting industry in the UK has the reputation to be one of the safest in the world. In addition to that, many of the sportsbooks that operate throughout the country are publicly-traded companies on the London Stock Exchange.

Figures about the gross gaming yield reveal the development of the gambling industry in the UK. According to statistics published on the official site of the UKGC, the total gross gambling yield (GGY) of the gambling industry in Great Britain for the period from October 2018 to September 2019 (excluding the Covid-19 period) is £14.3 billion. The figures show a marginal decrease of 0.5% compared to the gross gambling yield for the period from April 2018 to March 2019.

Based on the statistics, the online gambling sector is the largest branch, comprising 38.6% of the overall market. Land-based gambling is the second big branch of the industry with a GGY of 35%. The National Lottery contributes 22.3% of the gambling industry GGY, followed by the lotteries with 4% GGY.

Remote gambling witnessed a significant increase of 146.1% between periods April 2014 – March 2015 and October 2018 – September 2019. Land-based gambling, on the other hand, decreased by 9.1% for the same period. As for the National Lottery, it witnessed a decrease of 1.5% in the GGY between periods April 2014 – March 2015 and October 2018 – September 2019. Lotteries GGY increased by 63.7% between periods April 2014 – March 2015 and October 2018 – September 2019.

Gambling Participation Levels in the UK

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The mere fact that the online gambling industry in the UK witnessed a steady GGY increase indicates that a growing number of people indulge themselves in gambling activities. Gambling is meant to be a form of entertainment. Unfortunately, sometimes people tend to forget this and use their hobby to suppress unpleasant feelings or to solve financial problems. Such individuals often fall prey to gambling addiction.

Compulsive gambling is a problem even in countries where gambling is illegal. However, jurisdictions that regulated the gambling industry can track the problem adequately and control the issue by adopting various measures. In the UK, gambling problems have always been a major concern.

Recent research shows that the gambling addiction rate throughout the country keeps on rising. The following infographic presents information about the percentage of individuals who are participating in at least one form of gambling.

Year 16-24 years old 25-34 years old 35-44 years old 45-54 years old 55-64 years old 65+ years old Males Females
2016 34.8% 45.5% 48.2% 52.2% 52.8% 46.1% 51.5% 42.9%
2017 36% 47.7% 45.5% 48.4% 48% 46.4% 49.6% 41.6%
2018 37.2% 45.6% 42.9% 51.2% 55.7% 43% 50.1% 41.7%
2019 38.1% 48.8% 47.2% 52.5% 51.4% 41.7% 51.7% 41.9%
2020 32.3% 40.5% 47.6% 48.5% 45.8% 39.5% 45.5% 40%
Resources:

The table shows that the largest age group for gambling is the one from 45 to 54-year-olds. In addition to that, we observe a tendency that younger people tend to gamble less. It is worth noting that in 2020, the gambling rate has slightly decreased compared to the rates from the previous years. Statistics reveal that over the years from 2016 to 2020, men participate in gambling activities more often than women.

Gambling Participation Among the British Youths

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One of the UK Gambling Commission’s priorities is to protect minors from the harmful effects of gambling. Recent research of individuals between 11 and 16 years old revealed that 1.88% of those surveyed are classified as problem gamblers. The report revealed that 2% of the surveyed personally visited a casino to play casino games. The same is the figure about individuals who played at online casinos for real money.

Only 1% of the surveyed personally visited a betting shop to play gaming machines and 2% personally placed a bet at a betting shop. The survey showed that 5% of the respondents claimed to have placed a private bet for money with friends or family. The following table presents detailed statistics about gambling participation among 11-16 years olds in England and Scotland. The figures included in the table are based on recent research conducted by the Commission.

Status Boys between 11 – 15 Girls between 11-16 11 years old 12 years old 13 years old 14 years old 15 years old 16 years old
Non-problem gambler 32.08% 31.92% 27.95% 29.76% 29.47% 31.02% 34.65% 40.49%
Vulnerable gambler 3.59% 1.32% 0.64% 1.74% 4.05% 3.23% 1.17% 4.88%
Problem gambler 2.78% 0.32% 2.99% 0.64% 0.86% 1.57% 2.58% 3.49%
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In an attempt to prevent underage gambling and vulnerable individuals, the UK Gambling Commission implemented tighter identity and age verification rules. The new guidelines came into effect on 7th May 2019, stating that online operators need to perform electronic Know Your Customer (KYC) checks before giving access to their site.

With the new changes, individuals need to verify their age prior to being able to make a deposit and play casino games for free or for real cash. Previously, players were able to verify their accounts within 72 hours after setting up an account and making a deposit, meaning that underage gamblers could deposit and play in the meanwhile.

Restriction on Free Play Games

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The new changes on age verification also include a restriction on free play games. This means that remote operators need to verify the age of any player before the customer is able to reach any gaming product included in the licensee’s portfolio, including free-to-play games. The same applies to licensees’ affiliates that offer free-to-play games.

The UKGC made it clear that it is not going to spare operators or their affiliates that do not abide by the new guidelines. An affiliate that does not comply with the new rules needs to be removed from the affiliate program of any online casino geared towards the UK market. The UK Gambling Commission explained that even though the free-to-play games do not offer a prize, these games are still addictive and children should not have access to them.

Ban on UK Credit Card Gambling

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On 14th April 2020, the ban on using credit cards to fund gambling came into operation. This means that UK residents are no longer allowed to use their credit cards for casino payments. The ban also extends to the usage of virtual wallets provided they are funded with credit cards.

The new restriction applies to both online and offline gambling activities. It is important to mention that the non-remote lotteries such as National Lottery Tickets and scratchcards personally purchased at a retail shop are not subject to the new rules.

The UK Gambling Commission stated that the ban aims at protecting players from losing money which they actually do not have. The officials further explained that this measure came into effect at the most appropriate time when the industry witnessed a significant increase in the use of remote gambling products due to the Covid-19 lockdown.

Research conducted by the UK Gambling Commission revealed that 22% of the people who use credit cards to gamble online are problem gamblers. It was found that many credit card gamblers (CC) tend to indulge themselves in gambling activities more often than the others. In addition to that, the survey showed that most of the CC gamblers are young people who have good incomes but a Low Gambling Literacy Score. This means that they are at risk of suffering significant financial losses when gambling.

Activity Credit card gamblers Non-credit card gamblers
Betting online 55% 35%
Slots or casino games online 31% 14%
Betting in person 29% 15%
Online bingo 29% 14%
Lottery or scratchcard (in person) 23% 33%
Game machines (in person) 19% 8%
Offline bingo 17% 13%
Land-based casinos 15% 2%
Online lottery and scratchcard 15% 21%
Private bets with friends or family 14% 4%
Resources:
The Uk Gambling Commission

Problem gamblers who use credit cards usually do not have the money available in their bank accounts or they want to hide their expenditures on gambling. On the contrary, reward-seeking gamblers are using credit cards for added protection, to earn benefits, or just because they use their credit cards for most of their spendings.

Statistics show that 55% of the surveyed UK residents use their credit cards for online betting, while only 35% use alternative payment methods for the same activity. The figures further reveal that 31% of the credit card gamblers play slots or casino games online. Interestingly enough, the non-credit card users prevail over the credit card customers when it comes to buying lottery tickets or scratchcards. The following infographic will reveal more detailed information about the types of games CC gamblers tend to play.

New Rules on VIP Customer Schemes

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In September 2020, the UK Gambling Commission implemented new guidelines to put an end to irresponsible VIP customer practices. With the new changes, online operators are required to check their players’ source of funds to make sure that spending is sustainable.

What is more, operators are charged with the task to keep track of signs indicating gambling problems prior to involving a player in their VIP programs. Online operators must conduct ongoing checks regularly to ensure that the information is up-to-date.

In addition to that, operators that offer loyalty schemes must appoint a person to keep track of compliance. More importantly, players under 25 years old are not allowed to join a VIP program. The Commission warned that licensees that fail to abide by the new rules might bid farewell to their VIP programs. The recent measures come as part of the Commission’s reform series to reduce problem gambling throughout the country.

Further Restrictions Looming over the UK Industry in 2021

industry

In January 2020, the UK Gambling Commission created three industry groups led by senior industry leaders in an attempt to minimise gambling-related issues. The main goal of the first group is to set the rules for creating online gambling products. As for now, the group introduced the minimum spin time for all slots games to be 2.5 seconds.

The second group is working toward making online advertising safer and protecting vulnerable individuals and children from the harmful exposure of gambling commercials. It is interesting to mention that the Commission joined hands with Facebook to reduce gambling advertisements on social media. The efforts of the third group are geared towards the high-value customers and so far, it managed to implement the new regulatory guidelines on VIP schemes, which we already discussed above.

As for now, the Commission mulls over changes that will make online slot games safer. The regulator proposes to disable some functionalities of the slot games, including multiple screen, turbo spin, spin stop, and auto-play mode. In addition to that, the Commission also considers to prohibit reverse withdrawals, implement speed and play limits, and allow players to see their net position and session time.

These restrictions are expected to reduce the percentage of individuals classified as problem gamblers. It is yet to become clear what measures the Commission will actually introduce during 2021 and how efficient these will be.

Recent Fines and License Revocations/Suspensions

revoke

The UK Gambling Commission has the power to impose sanctions on operators that do not comply with the established regulatory framework. Based on the information published on the Commission’s annual Enforcement Report, the regulator revoked 11 licenses, suspended 5 licenses, and imposed fines that amount to over £30 million. In addition to that, the Commission conducted 234 security audits and 350 compliance assessments of land-based and online operators.

The last company to have its license revoked up until now is Silverbond Enterprises Ltd which operates the highly popular land-based gambling venue Park Lane Casino. Interestingly enough, the person behind the company is believed to be Vasilijs Melniks. In 2019, he was investigated for money laundering practices.

Triplebet had its license suspended earlier this year. The Commission also slapped the company with a fine of £739,099 due to failings in the major company’s social responsibility and anti-money laundering practices. Among the companies that had their licenses suspended are Stakers Limited, Addison Global Limited, and Multi-Media Entertainments Limited.

Sportito was yet another company that had its license suspended as it failed to integrate the self-exclusion scheme GamStop on time. Fortunately, its suspension was lifted after the company implemented the scheme.

In April this year, the UKGC levied a hefty fine of $16 million on Caesars Entertainment for failing to protect problem gamblers. Interestingly enough, the company operates 11 casinos across the UK.

Betway was also fined £11.6 million for failing to carry out source of funds checks on a ‘VIP’ customer. Mr Green, a subsidiary of William Hill, was among the companies that were slapped on the wrist by the UKGC. The operator was fined £3 million for “systemic failings” in its measures to prevent money laundering and problem gambling.

  • Author
Harry Evans

Harry Evans

Harry Evans is a long-year journalist with a passion for poker. Apart from a good game of poker, he loves to write which is why he spent several years as an editor of a local news magazine.
Daniel Williams
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