The UK gambling industry continues to post impressive earnings figures, especially in the online sector. However, those in the business know that stricter regulation is making life a little more difficult for them. That’s why some of the leading UK companies are looking to strengthen their overseas businesses.
The first three months of this year saw online gross gambling yield of £1.45 billion recorded. That was a rise of 7% from the total in the same period last year. Of that total, online slots accounted for £689 million, an 11% year-on-year rise.
Can such figures be maintained? The Betting and Gaming Council are afraid that may not be possible as regulation of the industry becomes stricter. Take the situation regarding online slots for example.
While online slots are exciting to play, it’s accepted that they can also be highly addictive. The government has now introduced maximum stake limits for the games. Those who are in the 18-24 age group can no longer stake more than £2 on one spin of the reels. For older players, the maximum stake is £5.
How will this affect the income of UK gambling companies? The government made an impact assessment that predicted operator GGY would be hit by £181 million. This seems to go against the desire by the Labour government to create growth in the economy.
That’s not the only problem facing the UK gambling company. By the start of October, a new mandatory levy payment must be made to the UK Gambling Commission (UKGC). This aims to raise funds of £100 million to help with research into and prevention and treatment of gambling harm.
The UKGC have also been busy issuing regulatory fines to those they have issued licenses too. Spreadex have been fined £2 million and TGP Europe were ordered to make a £3.3 million regulatory settlement. The latter opted to leave the UK market rather than pay that amount.
There is also a new gambling tax system going to be introduced. The industry is being consulted on the planned changes but fear that it could see tax rates increased. That’s already been the case for them with National Insurance.
With stricter affordability checks also taking place, the industry fears that players will leave the licensed and regulated industry. That would see even more revenue being lost by the licensed UK gambling industry.
Flutter Entertainment is one of the best 20 UK casino websites as per top20ranked.com. They run sites such as Betfair, Sky Bet, Tombola and Paddy Power. They have now announced that Betfair will be closing their affiliate marketing program in the UK and Ireland on 1 July.
Their aim is to put more effort into their desire to expand in international markets. Why has this decision been taken? A message to their partners explained that “a series of changes to the UKI market and an increasingly complex regulatory landscape” is the key reason. Ireland has also seen stricter regulation of the gambling industry introduced.
Flutter states that over €100m a year is being spent on compliance and responsible gambling measures in the UK and Ireland. Last year saw them make payments of £680 million to the UK government. That was for VAT, employment levies, gaming duties and corporate tax. With the National Insurance rise and upcoming tax changes plus the mandatory levy, their actions are understandable.
The US is going to be one area where they will place more focus. Flutter Entertainment has already had great success there with their FanDuel site. The American gambling industry has seen enormous growth in recent years. A 2018 US Supreme Court Judge ruling allowed individual states to have the final say on changing their gambling laws.
Nearly 40 US states have now made online sports betting legal. FanDuel earned revenue of $1.67 billion in the latest quarter, making them the leading online sportsbook in the US. The estimation is that the US market will contribute close to half of their projected profit with a figure of $2.4 billion by 2027 being their projection. Regulation in the US does exist but not at the levels seen in the UK and Ireland.
Italy is another area they are concentrating on. They acquired Snai for €2.3 billion in 2021 and currently Flutter has around 30% of the Italian betting market.
Brazil is another area in which UK companies are looking to expand. Betfair Brazil recently merged with BetNacional to create Flutter Brazil. There are lower costs involved in that South American country. Bet365 are also increasing their presence in the Brazilian gambling market. They recently signed a deal with the Allianz Parque stadium who host football matches played by Palmeiras.
The future will see stricter regulation in the UK and Ireland gambling markets, With this being the case, it is likely we will see more UK gambling companies looking to strengthen the assets they hold overseas.