In the past few years, we have seen lots of changes affecting the UK gambling sector and this volatility is likely to stay in 2019. Despite the challenges, as reported by casino review sites CasinoBiggestBonus.Com, operators have been able to perform well both in 2017 and 2018 with the gross gaming yield of the UK gambling industry that is around £14 billion (£4.7 billion that are generated by online gambling accounts).
In addition to showing a steady revenue increase, 2018 has had some definite challenges for the operators: the country’s legislators have come to terms to the fact that despite companies have increased in prosperity, they have done so in some cases by hurting local gamblers, their families and in some cases communities.
Many studies have revealed that the UK has seen in the last few years an increase in problem gambling and that pushed the legislators to change the UK gambling laws to counter-balance this phenomenon. Many bills have been made that will come into effect in 2019, and that might significantly affect UK gambling companies revenues.
FOBT Maximum Stake Reduced
FOBT have been under the spotlight for a while now, and after waves of criticism, the Department for Digital, Culture, Media and Sport (DCMS) has decided in May 2018 that the maximum wagers allowed at the fixed odds betting terminals (FOBTs) will be cut from £100 to £2.
This is hardly surprising as FOBTs have been seen from some time as the biggest evils in the Britain gambling industry: they are directly linked with the increase in problem gambling rates as they are strongly connected with disadvantaged communities. Anti-gambling campaigners have clearly highlighted that thousands of people in the UK have been affected by the negative consequences of those machines with the result that gambling addition rates have continued to increase.
The Association of British Bookmakers (ABB) however has flagged that the reduction of the FOBT’s maximum stake will hurt the overall performance of gambling operators. For this reason, they tried to delay the new laws to coming into effect by saying that businesses would need some time to adjust to those changes. Gambling companies also said that due to FOBT maximum stake reduction many high-street betting shops will face closure and lots of jobs will go in the industry.
The HM Treasury is expecting to lose more than £100 million every year in taxes due to the FOBT maximum stake reduction. Also, for this reason, the Government made a decision to give gambling companies until October 2019 to adjust their operation to the new changes. That decision, however, caused a vast number of complaines among communities and even Members of Parliament. The delay even caused the resignation of the then Minister of Sports and Civil Society, Tracey Crouch, who was keen to see the detrimental impact of those gambling machines being addressed.
After the complains, the UK Government decided to stick to the initially announced date so the reduction will now happen in April 2019.
Point-of-Consumption Tax Increase in 2019
At the moment gambling operators in the UK are required to pay a 15% point of consumption tax. That was introduced in 2014 to ensure that taxes will remain in the UK even if operators would set up themselves abroad.
The UK Government decided to compensate for the losses that it will suffer from FOBTs machine stake reduction by increasing the tax to 21%. After all the exchequer has estimated that the losses from the maximum stake reduction will be more than £1.10 billion over 5 years.
Many gambling operators have complained and said that the tax increase it is too high for them and that they will be forced to raise the prices so that they can compensate for the losses they will incur. Surely it is a fact that general legislation changes like FOBT maximum stake reduction and the significant increase in gambling tax all in short time will cause significant challenges to operators.
More UK Gambling Operators Expand In the US
In 2018 we have seen lots of UK traditional operators starting to look abroad and especially in the US to improve their financial stability and ensure growth in the years to come.
Some of the UK companies have seen those legislations changes as a massive blow for their performances and have tried to compensate by opening up a new market. The good news in that sense came after the US Supreme Court finally decided to lift the federal ban on sports betting with all the different states that can now decide if legalise it or not. This market has, therefore, become very attractive to UK gambling companies which are keen to expand.
It is expected that more and more states will legalise sports betting in 2019, so more UK gambling companies are likely to expand on the other side of the pond.
Ladbrokes have already made a 50:50 venture with MGM Resorts which is worth more than £150 million and in September 2018 William Hill formed a partnership with Eldorado Resorts, which is a US casino firm: that deal alone allowed William Hill to access 23 million customers. In December 2018 gambling operator 888 also showed plans to expand in the US by taking control of All American Poker Network (AAPN). The deal should help 888 to boost their casino and poker brand and set the basis for sports betting expansion.
We expect that more and more UK gambling companies will expand in the US during 2019 as this is a strategically viable solution to counterbalance the legal restrictions made in Britain that will have a significantly adverse effect on their revenue.