What does the government’s new white paper on gambling mean for the online casino industry?

The UK ’s new white paper on gambling reform for the digital age has been out for three weeks, but what do the upcoming rule changes mean for the online casino industry? Let’s take a look.

The white paper is fundamentally aimed at the online industry, as it proposes updates to current legislation for the digital age. It suggests increasing the powers of the Gambling Commission, introducing new stake limits (including different ones for the youngest age bracket of gamblers), frictionless protection systems, and more rules to prevent the marketing of bonuses to vulnerable players, including “how free bets and spins are constructed”, affordability checks, wagering requirements and the statutory levy.

However, while the paper may have been published, many finer details have been left up to consultation by the Gambling Commission.

New rules for online slot stakes

“A new stake limit for online slots will be introduced with the default maximum stake of between £2 and £15 per spin, subject to consultation. The measure will help prevent runaway and life-changing losses and level the playing field between the online and land-based sectors.”

There are also plans that will include particular low limits for the youngest age group (18-24-year-olds) who, research has shown, are more at risk of problem gambling. The maximum slot stakes will vastly reduce slot machine revenue. Online slots are currently the most revenue-generating game in the UK, with spins ranging from a penny to five hundred pounds a spin.

With new slot stake rules, the UK market will become less attractive. It’s possible that developers and operators will focus on emerging markets that have fewer operating constrictions and allow higher revenue generation. While operators are not expected to leave the UK market, the refocus may mean reduced spending on new player onboarding or marketing. One thing is for sure, UK operator revenue streams will take a hit when this new regulation comes into force.

Free bets, free spins, risk-free terminology and wagering requirements under the hammer

The UKGC “will now take forward work to review the design and targeting of incentives such as free bets and bonuses to ensure there are clear rules and fair limits on re-wagering requirements and time limits so they do not encourage excessive or harmful gambling. The Commission will consult on proposed new controls.”

There will be new rules for bonuses, such as free bet offers to ensure there are clear rules and fair limits on wagering requirements. This area of the white paper is fascinating. The government has re-termed wagering requirements as “re-wagering requirements”, highlighting how they work against players, creating a high-risk scenario.

“The combination of high re-wagering requirements and tight time limits to claim winnings poses clear risks in terms of creating a sense of urgency to gamble, incentivising high-intensity play and potentially gambling more than one had originally planned to”.

Wagering requirements have long been a bone of contention, with high requirements potentially encouraging excessive play. However, more recently, some sites have begun offering no wagering requirements on their bonus offers, and affiliates such as No Wagering help customers find these sites.

With wagering requirements firmly under the spotlight of the Gambling Commission, the no wagering movement is set to continue its rise. Affiliate sites like No Wagering have proved popular with players as they showed an early interest in getting a better deal by only partnering with online casinos offering zero wagering bonuses. As more operators offer better bonuses, affiliate sites well-established in the area will continue to grow.

When used in bonuses, the term “risk-free” has been gaining attention, as gambling by nature is not risk-free, and as players must first deposit to get the bonus, there is a risk. The CAP has now banned operators from using ‘risk-free’ terminology in light of research from GambleAware.

What does this all mean for operators? Well, it’s time to clean up bonus terms and conditions once again, and if they hadn’t already (the Gambling Commission had previously warned all operators to clean up their terms and conditions and check their wagering requirements were responsible) review their bonus terms, language, and wagering requirements.

Operators need to ensure their bonus terms and conditions and language do not encourage irresponsible gambling or misrepresent an offer. They also need to take care with marketing communications and ensure that customers need to opt into these comms, and opting out is frictionless.

Affordability checks

“Firstly, background checks at moderate levels of spend, to check for financial vulnerability indicators such as County Court Judgments. We propose these should take place at £125 net loss within a month or £500 within a year. 

Second, at higher levels of spend which may indicate harmful binge gambling or sustained unaffordable losses (we propose thresholds of £1,000 net loss within 24 hours or £2,000 within 90 days), there should be a more detailed consideration of a customer’s financial position. We also propose that the triggers for enhanced checks should be halved for those aged 18 to 24 given evidence on increased risk.”

The white paper suggests how and when (financial spending patterns) affordability checks should be made. It also estimates that “enhanced checks are narrowly targeted, and we estimate only around 3% of online gambling accounts will be affected”. 

The Gambling Commission has been left to consult on the proposed moderate and enhanced levels of background checks. Regardless of consultations, the effect for operators will be implementing new flagging and intervention systems for player deposit behaviour, most likely segregated by different benchmarks for the 18-24-year-old age group and older bettors.

Level of statutory levy

The white paper confirms a statutory levy will be introduced but doesn’t set the exact contribution rate for operators, leaving it up to consultation by the Gambling Commission. So far, it’s been widely thought that the levy used to fund responsible gambling research and treatment will be set at 1%. However, the following consultation period aims to ensure the levy is “proportionately and fairly constructed”.

Increasing powers of the Gambling Commission 

“The Commission will become a more proactive regulator and it will now start building the capacity to require and analyse more data from online operators to identify non-compliance with licence conditions. Where breaches are spotted, the Commission will have increased resources to use its enforcement powers to full effect“.

The quote is self-explanatory in that the white paper empowers the Gambling Commission to act more swiftly regarding operator non-compliance. It also continues that the Commission will be given additional powers (when parliamentary time allows) to take action against illegal gambling sites. The white paper signals a new era for the Gambling Commission, one where it is more powerful, able to access and change regulations quicker, sanction licensees, and block illegal sites.

In the government’s accompanying press release, they highlight that despite the current regulatory air, some operators, like William Hill, are still hitting the headlines for record-breaking fines regarding anti-money laundering checks and social responsibility (allowing one customer to open an account and spend £23,000 in 20 minutes without any checks).

With many areas not yet fully hashed out, like customer checks and limits on “re-wagering requirements”, UK operators must keep abreast of developments and new regulations as they come into force. With a freshly empowered Commission at the helm, it’s clear that there will be further huge fines in store for any slow-to-act operators from here on in.