The evolution of UK gambling regulations looks set to remain high on the news agenda this year, with the Gambling Commission (GC) due to report back on various consultations, as well as to launch others.
Almost 10 months after publication of the long-awaited Gambling Act Review “White Paper,” published in April 2023, various industry stakeholders are still making determined attempts to moderate the ways in which the industry could be regulated going forward.
One area that has caused controversy since its earliest mention in the White Paper is affordability.
The White Paper outlined two forms of financial-risk check to be consulted on by the GC. The first involved background checks for indicators of financial vulnerability by using official documents, such as County Court judgments, to check for history of bankruptcy. These were recommended to kick in at a £125 net loss within a month or £500 within a year.
More detailed checks were proposed for those gambling at higher levels, for example, when a net loss of £1,000 was detected within 24 hours or £2,000 within 90 days.
However, operators have always been concerned that imposing in-depth affordability checks on punters may deter them from using licensed products, pushing them instead to the black market.
At the end of November, the Jockey Club launched a petition opposing the introduction of the affordability checks. The petition gathered more than 100,000 signatures within 27 days, which is the level required to trigger a parliamentary debate on the subject. This week, that debate was scheduled for 26 February.
The Jockey Club and the British Horseracing Authority (BHA) believe the affordability checks are discriminatory and will be to the detriment of the horse-racing industry, forecasting a potential £250m loss in revenues over a five-year period if the new rules are enacted.
Despite this, the GC stands by the White Paper’s recommendation, suggesting that affordability checks will affect only around 3% of gamblers.
Nonetheless, the issue is of significant concern to the industry. In September, GC Chief Executive Andrew Rhodes told a Department for Culture, Media and Sport (DCMS) select committee that the regulator had received 1,500 responses to its consultation, most of which were mainly concerned about the affordability checks.
The difficulty now for the regulator and politicians is how to manage the backlash. While consumer protection is said to be top of the agenda on all sides of the debate, the strength of opinion against the White Paper’s proposals will be hard to face down without being seen to have run a very long consultation process for nothing. It seems that there will have to be some compromise.
Elsewhere, last week, amusement- and gaming-machine-industry trade body Bacta responded to DCMS Secretary of State Lucy Frazer on plans to raise the maximum stake and prizes offered by gaming machines in UK.
Bacta argued that because the levels have not been reviewed since 2011, its members are struggling to compete with online-gambling operators. As such, it has called for stake limits on fruit machines (category C) to be raised from £1 to £1.50, with a commensurate prize increase from £100 to £150.
Meanwhile, it wants multi-game fruit machines (category B4) to see a rise in maximum stakes from £2 to £2.50 and prizes to increase from a cap of £400 to £750. The group also recommended a rise for slot machines, going on to argue that its member’s venues were among the safest gambling environments.
The concern expressed by Bacta in terms of staking limits is similar to that of the wider industry when it comes to affordability: No one wants to see the regulated industry unable to compete.
Major online operators, arguably those that the public fear cause the greatest harm, are in the best position to remain competitive despite the changes being suggested. But for parts of the industry running on tighter margins, the fear is that this regulatory clampdown could render them unviable.
The fear that punters will be driven to the black market is of genuine concern, as recent research found that there has already been a significant uptick in the number of unlicensed operators targeting the UK.
Betting, gaming, and lottery marketplace Yield Sec reported last week that the number of black-market operators targeting the UK had risen sharply since 2020, reaching 231 last year, equating 4% of UK online gross gaming revenue.
Not only had the number of unlicensed operators risen, but they seem to be intentionally dodging self-exclusion tools like GamStop to target vulnerable players. Yield Sec went as far as to suggest that these operators are actually avoiding “mainstream customers” in favour of the vulnerable.
Arguably, this is a demographic already unaffected by the potential imposition of affordability checks, but it does highlight the risk of black-market players gaining market share if the regulated market ceases to compete as a result of unwieldy or disagreeable regulatory requirements.