Ed Birkin, a senior gambling consultant with considerable experience in the social casino and esports markets, shared the information about the current state of the gambling industry in Great Britain. For more details on this topic read also LoginCasino gambling news.
On April 14, 2020, the usage of credit cards and e-wallets for online gambling was banned in Great Britain. How did it influence the overall situation in the market?
Credit cards make up approximately 5% of deposits for the UK operators. Although the impact on revenues is less than this as a proportion of these deposits will still be made through other means. Therefore, while it is a headwind for the industry as a whole, it is not a major headwind that will impact the growth of the market materially. However, it is a further cut into profitability for individual operators. Some larger operators guided to the impact on earnings and extrapolating this across the industry as it means that the industry could see a reduction in profits of £70-100 million a year due to the ban.
Many polls show that gamblers are going to return to land-based casinos as soon as they reopen. What is the reason for this? Why can’t virtual casinos become a substitution for them?
The demographics and behavioral drivers for land-based casino customers are very different from online casinos. Many industry commentators have wrongly forecast the demise of the land-based gambling industry in the UK, saying that everyone will shift to online products. However, while online gambling has cannibalized a part of the land-based market, retail casinos continue to have a strong core audience, and we don’t see this changing any time soon.
Whereas online casinos offer the same gambling opportunities, they lack the social aspect of visits to land-based casinos. They are often included as a part of a wider evening out and considered as a leisure and gambling activity. This is something that virtual casinos are not able to replicate, even with the growth of a live dealer product.
The number of people who gamble in the UK has dropped during the lockdown. Why did it happen?
The lack of land-based gambling products has had a big impact, but there has been a decline in certain sectors, notably sports betting. Online sports betting has held up much better than expected, with virtual sports, eSports, table tennis, and Belarusian soccer all playing their part to fill the product gap left by the suspension of most traditional sports. However, for a large number of casual customers, the lack of major competitions – particularly the Premier League – has meant that they have had no incentive to go to betting websites.
After the initial data about the growth of online gaming at the start of the lockdown came out from Italy, there was a concern by regulators that the number of people, who would gamble during the lockdown, would increase, but this wasn’t the case.
Which sector of the gambling industry is the most promising in Great Britain? Why?
The gambling industry has experienced multiple headwinds in recent years. For the land-based industry, the most notable one is the UK bookmakers seeing a restriction in the maximum stake on FOBTs to £2. As for the online industry, there have been tax increases, the inclusion of free bets/bonusing into tax calculations, advertising restrictions, and the ban on credit card gambling, to name just a few. However, it isn’t the end because the APPG for Gambling is recently releasing its report, which calls for further widespread restrictions on the industry, ranging from the reduction in online slot stakes to £2 to the abolition of in-play betting. It will lead to the collapse in tax revenue and create a huge black market that is counter-productive to what the APPG wants to achieve. However, to stop this happening, the industry needs to have a strong, data-led response and fight its corner. In that sense, it’s difficult to pick one sector over another at the moment. The online sector – for both betting and gaming – has the strong underlying growth drivers of a continued shift towards digital products and the convenience of mobile. At the same time, it’s also firmly in the sights of certain people who want to damage the industry as much as possible.
According to recent news, loot boxes may be classified as gambling by the UK government because they can cause addiction. What is your opinion on this?
Gambling in the UK needs to have an initial outlay from the customer, an element of chance, and a reward with monetary value. In this respect, the Gambling Commission does not classify them as “winnings” or content of the loot box is not a monetary value. Certain elements within the UK government believe that they should be classified as gambling because it starts to build a gambling-like behavior in children. Whereby they pay for the loot box before they know what it contains, and so are “gambling” on the contents is something that they want. I can see both sides of the argument, but I think that it may set a dangerous precedent where they will be classified as gambling. Most things in life involve an element of chance, and a line should be drawn somewhere. Otherwise, you end up with continued regulatory creep, so that more and more things get included in this description.