Current State of the UK’s Gambling Industry

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Friday, March 10th, 2017 | Written by Charles Washington

In mid-February, the ICE Totally Gaming exhibit was held in the UK, bringing experts from the industry and operators side by side at the London Excel center. Panels and exhibits at the event help to paint a vivid picture of the state of the gambling industry in the United Kingdom, and here are some of the biggest takeaways from the exhibition:

– Online Gambling is Gaining Market Share

While online gambling laws in the United Kingdom are viewed by some as strict, the industry is continuing to thrive. In fact, the Programme Director for the UK gambling commission, James Green, has revealed that the online sports betting, casino and bingo market sectors currently account for 29 percent of all gambling revenue in the UK, making iGaming an overall very a profitable industry to emerge.

At the event, concerns were raised about a change to the regulations that is slated to go into effect on August 1, 2017. Jim Mullens, the Chief Executive Officer for Ladbrokes, said that operators were less than thrilled with the new policy, which will assess a tax on free bets. With the new rule in place, operators will have to pay a 15 percent tax on the first free bet money that the sites award to players. The UK Office for Budget Responsibility estimates that the new tax will bring in an additional $64.6 million in tax revenue for the country a year, adding up to a large cost for operators. Still, the policy is more lenient than a previous version that would have taxed all free bets.

– Land-Based Casinos Are Struggling

While online gambling is booming, casinos in the United Kingdom are struggling to remain profitable. At the event, many individuals who spoke at panels blamed outdated gambling regulations as the cause, with the current laws governing the operations of land-based casinos dating back to 1968. Although a revised version was signed into law in 2005, the bill did very little to address the regulations that are stymieing the industry.

One of the biggest barriers to success identified at the convention is restrictions on size. Small casinos are only permitted to have 80 slot machines, while larger casinos may have up to 150. This in turn greatly limits the ability of casinos to devote large areas of floor space to slots, which is one of the most popular and profitable types of gambling for casinos.

Although the industry is struggling, people in the UK are still going to casinos, though. From 2010 to 2015, attendance increased by 3.6 million people with about 75 percent of the growth centered in London. The London casino industry is pushing hard for the government to revise gambling laws so that struggling casinos can begin to profit from what seems to be a renewed interest in gambling. Their hope is to be able to build more casinos and create business models more like their European neighbors, which receive up to 80 percent of their gross gaming revenues from slot machines.

– Millennials a Challenge for Industry

Looking ahead, the industry seems to agree that it faces a challenging time ahead, in both the live and online arenas, unless it found a way to attract the millennial generation, or those people born between the mid-1990s to early 2000s. This segment has grown up used to a much higher level of technological sophistication, including the use of console games, and mobile devices, and unless innovations are adopted that better appeal to this group, then the impact on the industry should be fully realized by at least 2020.

Commenting on the important issue, Oulala CEO Valery Bollier went so far as to suggest that “the Gaming business will fall off a cliff if they do not adapt to the millennial audience.” Included amongst the range of innovations suggested for addressing this concern is the integration of social media into iGaming and Virtual Reality games.

According to statistics, online gambling participation among millennials reached 17% between 2013 and 2014, but between 2015 and H1 of 2016 that figure had dropped to just 10%. Over the same period, however, participation amongst the 25 to 54 age group has continued to increase, and reached 16% for those aged 45 to 54 year, compared to just 10% in 2015.