UK Gaming landscape – sinking or swimming?

A glance at the current state of the UK land-based and online Gambling landscape and what the future may bring on the back of London hosting the ICE Totally Gaming exhibition recently held at Earl’s Court.

Larger market share for the online gaming sector predicted

UK Gambling Commission Programme Director James Green pointed out that the online sports betting, casino, and bingo market sector now holds a 29% market share and that gambling officials are interested to see how this would change in time when commenting on the latest online gambling statistics.

He also emphasised that researching market trends and consumer participation is instrumental to the Gambling Commission’s efforts to shape an effective regulatory policy and “secure UK-based gambling customers with safe, fair, and crime-free industry.”

The UK regulations have not made life easy for the remote gaming industry and with a new tax legislation just around the corner, the major gaming competitors held their breath again.

The online gaming industry is, as Jim Mullens the CEO of Ladbrokes quipped “not jumping for joy”, with the new “free-bet” taxation which is scheduled for implementation on the 1st August 2017. According to a forecast published by the Office for Budget Responsibility, the amended treatment of freeplays will result in £45m (€57.0m/$64.6m) being contributed by the gambling industry in the 2017-18 fiscal year, with that rising to £110m by the 2020-21 fiscal year.

Free bets are the online casinos biggest tool for attracting and retaining players online. All the well-known casino names such as PaddyPower, 888, Bwin, and others who offer real money slots online on their casino sites will be taxed at 15% for the “free gift” to their customers as of August this year.

Online gambling operators were able to sigh a little last December after the government decided to revise its plan to tax online casino and bingo freeplays. Operators have argued that taxing all freeplays in the same manner, would impose an unacceptably high tax burden. HMRC announced that by “taxing the first use of freeplays only and, winnings” will only be brought into duty calculation at the of the end re-wagering process.

So what’s new for “Brick and Mortar” casinos in London?

Struggling land-based casinos in London are in total agreement that the reason they are finding it hard is purely down to outdated legislation stemming from the 1968 Gaming Act that still is in force today. The 2005 Gaming Act did little to elevate the restrictions land-based operators have to deal with. Casinos established under the terms of the 1968 Gaming Act are restricted to a maximum of 20 gaming machines, small casinos are allowed up to 80 machines and large casinos may offer up to 150 machines.

The sector is also suffering market failure as there are no new licences to be had since the 2005 act and many of the licences issued in 2005 remain dormant and will never be used. Meanwhile, casino attendances in the UK and particularly in London have soared over recent years, between 2010-15 attendances increased by 3.6 million with more than 75% of that growth coming from London.

The London casino industry is lobbying for legislation that is comparable to the kind of experience a player gets to enjoy in Las Vegas, Barcelona, Macau or the big cities in France. At present casinos in major European Countries earn significantly more from slot machines, for example in France it accounts for 80 percent of their revenue whereas in the UK slot machines only account for 15 percent.

The government rightly pushes businesses to implement the latest technology, but because the legislative regime isn’t fit for the 21st century, the terrestrial casino industry is unable to take advantage of technological advancements in the same way that the remote industry can.

London hosts Europe’s largest Gaming Expo, ICE

The biggest land-based and online casino exhibition wrapped up last week. Clarion Gaming, who host the expo every year, said that this year’s event was the best show yet. 567 exhibitors and over 28.407 delegates splurged in all things gaming from 7th-9th February 2017. Held at Earls Court, it is one of London’s most anticipated and visited international expo’s attracting industry leaders from every corner of the world.

Similar to previous years, casinos, developers, providers, entrepreneurs, regulators, and other involved personalities gathered together to draw a map on where the global gambling industry is heading. Up for discussion were various important topics, including game design and development, cybercrime, security and regulatory compliance, the success of the sports betting industry, regulatory measures around the world, and much more.

That this lot knows how to work hard and to play hard is something of an understatement and something London’s Hospitality industry has appreciated as a yearly highlight for over a decade now.

Looking forward

By 2020, the millennial generation will start to fully impact our workforce. Millennials are a challenge to both land-based and online gaming operators. This generation have grown up with the most sophisticated console games and are used to constant social interaction on their iPhones and other mobile devices.

Valery Bollier, CEO, and co-founder of Oulala games got 43% of the audience vote under the panel discussion regarding the future challenges facing online gaming when she stated “the Gaming business will fall off a cliff if they do not adapt to the millennial audience. Other comments on the future of gaming focused on the increasing regulation of remote gaming and the need to get up to speed with regards to integrating social media into the igaming experience as well as Virtual Reality (VR) and other new technology millennials will expect to be part of their igaming experience.

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