Dominic Ford used to run seven gaming stores. Now he only has one. The closure, which cost him 22 employees, was due entirely to the British government’s decision in 2018 to reduce the amount bettors can wager on electronic slot machines from £100 to £2.
It took a lot of work, and as far as I know, it didn’t do any less harm, Ford said, adding that customers who previously came into the store simply shifted their gaming to the online casino.
The government has now turned its attention to online operators. It will announce plans to overhaul the UK’s gambling laws in the spring. Regulations could include a £2 bet limit on online slots, limits on customer deposits and checks on how much players can afford to wager.
I’m not an online operator, but if it has the same impact there as it does in the retail space, then the results will be disproportionate to the harm avoided, Ford argued.
His claims have been hotly debated by former veteran pokies players and activists who say greater regulation is long overdue. One former poker player lost £59,000 in a 13-month period between 2016 and 2017.
The prospect of stricter laws – and the need to clean up the industry’s image – poses a challenge to the UK’s £13 billion a year gambling industry, which includes the world’s largest regulated online market. The new rules are expected to hit operators’ margins hard and could force smaller providers to close.
Flutter, owner of Paddy Power and SkyBet, said in November that its investment in safer gambling initiatives ahead of any regulation meant its stake in the UK had fallen. 888 and Entain, owner of Ladbrokes Coral, both said revenues fell in the fourth quarter of last year as a result of crackdowns in the Netherlands and Germany. An investigation into the financial status of participants could delay the company’s most profitable participants.
The Gaming and Wagering Commission recently released a poll saying that 58 percent of gamblers surveyed do not allow companies to audit them. Analysts at Royal Bank of Canada said that equity restrictions and affordability checks could have a significant near-term financial impact on companies. Investec analyst Roberta Ciaccia said the U.K. market may never again achieve double-digit growth.
Ciaccia said investors have become wary of the sector because of larger social and governance issues and have begun to pull money out of it and lock in any profits they make. Many operators have taken pre-emptive action to make betting safer. According to the Gambling Commission, they want the UK’s problem gambling rate to drop from 0.6% in 2020 to 0.3% last year, which would soften the regulator’s approach.
Flutter has introduced some of its strictest self-imposed measures, piloting a £10 betting limit on online slots and introducing a £500 monthly spending limit for those under 25. It says it is associated with about 7,000 of its 3 million monthly players, warning them against dangerous games or enforcing limits, and has reduced the number of VIPs (high-spending gamblers) who use its brand to place bets by 94 percent.
Flutter acquired Tombola, a British bingo brand with 400,000 monthly players, for £402 million in November as it moves into the low-spending gaming space. Virgin Games owner Gamesys said it interacts with about a fifth of its customers each month to prevent harmful bets, and is in its 12th iteration of an algorithm that scores players’ risk on a daily basis.
Entain has developed an artificial intelligence program designed to identify problem gamblers. It claims its model is more than 90 percent accurate and intervenes on customers who show unusual deposit patterns to prevent 30 percent of them from becoming high risk.
But Matt Zarb-Cousin, director of Clean Up Gambling, says personal behavior does little to prevent harm because addicted gamblers simply move from one operator to another if they encounter intrusive checks. The only way to reduce harm across the industry and not affect the market share of individual operators is through regulation, which will level the playing field.
Nothing any individual operator can do is enough, because it would be against business and shareholder interests, he said.
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