Online casinos braced for major changes under new review
Legalised for the first time by the Tony Blair government in 2005, the business truly hit its stride after the financial crisis of 2008. The market grew at such a frenetic pace, there were soon online casino and gambling brands able to splurge millions of pounds on Premier League team sponsorships. However, all that success and visibility came at a price.
MPs and campaigners have been increasingly vocal about the harmful effects of online gambling in its present form. And finally, a long-awaited review of the gambling laws is underway, promising big changes to the industry.
What is the need for a review of UK online gambling laws?
Online gambling was formally legalized and regulated under The Gambling Act 2005, which has only undergone minor revisions over the years. It created the UK Gambling Commission (UKGC) to oversee and regulate an online gambling market.
The role of the UKGC was to ensure safe and fair gambling, with adequate protection of children and vulnerable individuals, responsible advertising, and removing the influence of criminal elements from the industry.
When the UKGC was created, online gambling was a niche market. The big money was in high street betting shops and fixed-odds betting terminals (FOBTs). But the situation has changed dramatically since then – today online gambling is worth £15 billion and towers above all other forms.
While the UK is widely considered the safest online gambling market in the world, criticism of the UKGC has been mounting. It has been accused of not doing enough to protect minors and prevent gambling addiction.
Though the Commission responded by strengthening some rules and increasing the fines issued for violations, many critics consider them inadequate. By the 2019 elections, gambling regulations were high on the list of agendas, accelerating the review process.
Who is doing the review, and when?
The review of the 2005 Gambling Act is being spearheaded by the Department for Digital Culture, Media, and Sport (DCMS). The review was set to take place in autumn 2020 but the complications created by the COVID pandemic delayed this. It was finally started in December 2020. However, there is no set roadmap to a new gambling act.
Given the ongoing pandemic and the government preoccupation with Brexit on top of it, the process could drag on for a year or more. Even the original Gambling Act of 2005 only came into effect by around 2007.
What are the changes expected in this review?
Given the strong demand for tougher regulations and the political support for such a move, one can expect some bad winds on the horizon for the online gambling business in the UK. The liberal nature of existing laws has given rise to hundreds of online casinos.
Just take a look at some popular online casino review sites - all the online casinos listed here may not be in business in a year's time. Here are some of the big changes expected as part of the review in 2021:
Limits on maximum betting stakes
Despite bitter opposition from the betting industry, the government recently voted to drastically reduce the maximum betting limit on offline gambling machines (FOBTs) from £100 to £2. Something along these lines is almost a certainty in online casino regulations as well.
Most online slots do not have any betting limits at all, which has made them a target for anti-gambling crusaders. And given their clear potential for harm among gambling addicts, some form of maximum bet limit is almost a necessity in the eyes of policymakers. Such a move would also come with additional limits on the size of prizes, and the speed of play.
That last bit is very important from a reformist point of view – faster rounds mean that players can bet a lot more, and win (or lose) more in a short period, often thousands of pounds. Mandatory breaks between rounds would greatly reduce this possibility.
Curbs on VIP Schemes, Bonuses, and Free Bets
The vast majority of online casinos rely on bonuses and free bets/spins to attract new customers. And to retain existing ones, they use special perks and bonuses given via a VIP Club. These VIP schemes are designed in a way to encourage players to bet more to gain more perks.
Given the strong implications of such a system on problem gamblers, the DCMS is bound to take a dim view of the existing rules permitting these VIP schemes. Free bonuses have already come under the scanner of the gambling commission in the past, due to some online casinos abusing bonus terms and refusing to pay customers.
Tougher background checks and self-exclusion
The way the self-exclusion works at present, if a problem gambler blocks himself at one site, he can still join another one and play. Proposed changes to the registration and background checking system would remove this weakness – casinos will be forced to share excluded player lists.
A central database would prevent online casinos from welcoming players who have a gambling problem, and ask for "affordability checks" before allowing a player to join. Tweaks to the responsible gambling system are also expected, removing the opt-in mechanism.
Bad news for UK online casinos
These are just some of the many far-reaching proposals on the agenda of the review. Others include restrictions on sponsorships (particularly in football), stricter ownership rules for non-UK operators using a white label casino, a mandatory gambling levy (currently voluntary), quicker withdrawals, ban or reverse withdrawals, higher withdrawal limits and so on.
All of these are expected to make the online casino market less lucrative with immediate effect. The maximum betting limits and stricter player monitoring will hit online casinos income in a big way. The golden age of online casinos in the UK may be soon on its last legs.