Following a two-year investigation by the British Competition and Markets Authority (CMA), three of the UK’s leading gambling firms have agreed to halt potentially misleading promotions. The sign-up offers in question gave players bonus funds when they put in their own money but blocking them from taking out the cash, raising concerns that players were being enticed to play more to get their winnings. While prominent operators Ladbrokes, William Hill, and PT Entertainment have already accepted the new standards, the Gambling Commission and the CMA made it clear that these changes will be rolled out industry-wide by mid-2018.
This crackdown on sign-up promotions comes as the UK is playing catch-up to adequately regulate its rapidly growing Online Gaming sector.
UK's large online gambling market share
Online Gambling now constitutes 33% of all UK gambling, making it by far the largest single sector of the British betting industry. With 12 million active accounts, the UK’s market share of the online gambling industry is larger than that of the rest of Europe combined. One poll found that 9 million British adults—around 17% of the UK’s over-18 population—had gambled online in the preceding four weeks. This growth happened startlingly fast: online gaming revenue in the UK increased by over 450% between 2009 and 2016.
The remote gambling sector’s exploding demand has put pressure on the UK to tighten its historically lax regulations.
Many countries around the world regulate online gambling extremely tightly. China and India’s crackdowns on the sector have spawned booming black markets, while the U.S.’s strict restrictions left Europe space to become the market leader.
Children allowed to download ‘social games’
Around the same time that the US was banning online betting, the UK was legalising it on UK-based websites.
The Gambling Act of 2005 also relaxed numerous other gaming rules, abolishing the requirement that people be a member of casinos for 24 hours before they can play, and permitting limited gambling advertisements on television. Children are allowed to download ‘social games’ simulating gambling with no age restrictions, and can spend real money on virtual ‘coins’.
In the face of online gaming’s surge in popularity, along with external pressures such as the WHO officially classifying ‘gaming disorder’—independent of any betting component—as a disease, the UK has been playing catch up with its regulatory framework. In addition to ending the controversial sign-up promotions, the CMA warned that gaming operators should expect further changes in the near future to offer greater customer protection.
Malta a pioneer in the gambling industry
Meanwhile, a recent government report called for a ban on using credit cards for online gambling and the institution of a mandatory levy on gambling firms to benefit player support charities. The Gambling Commission’s recent letter to the UK’s leading remote casino operators further underscored that UK firms still have to address serious issues regarding protecting consumers.
However, while the UK has been playing catch-up, other countries in Europe have long read the signs and remained ahead of the curve. For example, former British colony Malta, the second country to allow online gambling, quickly became a pioneer in the industry, issuing up to 500 online gaming licenses. The sector contributes €1.2 billion to the island nation’s economy, representing a staggering 12% of its GDP.
This early acceptance of online gambling, along with a forward-looking regulatory approach, gave it a head start on developing effective regulation centred around consumer protection. As early as 2011, Malta obliged gaming operators to have self-barring facilities, by which players can confidentially and irrevocably request to be barred from gaming for six months or a year.
The scheme has been well received, with requests increasing by 17.8% between 2016 and 2017. The next step, as the Malta Gaming Authority (MGA) develops its second-generation gaming regulatory framework, is to establish a unified self-exclusion database for both land-based and remote gaming. The new regulation would also formalise the mediatory role that the MGA’s dedicated player support unit plays.
Remote gambling industry in Gibralter
If the UK needs more inspiration, however, it could also look closer to home for guidance on how to bring its online gaming regulation up to scratch. British overseas territory Gibraltar, which licensed its first online gambling site in 1998, has made the remote gambling industry a mainstay of its economy.
The industry employs 12% of the Gibraltarian workforce and accounts for as much as a quarter of the territory’s GDP.
Despite its reputation as an e-gaming paradise, Gibraltar maintains extremely strict standards, rejecting up to 99% of gaming license applications and requiring successful firms to establish a genuine physical presence in the territory. This small number of operators has led to a remarkably low rate of complaints – only around 250 a year out of an estimated 10 million customers.
With the online gambling market showing no signs of slowing down, British regulators would do well to realise it should stay ahead of the curve. Leeds-headquartered operator SkyBet is anticipating a £3 billion IPO, while a crackdown on fixed-odds betting terminals is likely to further fuel the online gaming industry’s expansion. In the face of this kind of growth, the UK can no longer afford to have its Gambling Regulation lag behind the curve.
