The casino world (as well as our online casino forum) went into controversy overdrive this week. A series of proposals from the Social Market Foundation (SMF) aimed at reducing problem gambling raised the ire of the industry, as well as punters. Some of these proposals look quite sensible, but others look sure to push UK customers away to offshore operators.
What are the proposals?
SMF suggests a soft deposit cap of just £100 per month per casino. Any further deposits in that month would require enhanced due diligence and affordability checks from the casino.
The group also wants to implement a stake limit on slots, set no lower than £1 and no higher than £5 per spin. Similar limits would be set on other online games (i.e. live casino), and no game should be played faster than at a land-based venue.
SMF proposes a kitemark symbol which licenced operators can add to their sites to show they are compliant with UK regulations. There should be a zero-tolerance approach towards offshore, unlicenced operators.
There is also a proposal to split up the licensing and ombudsman functions of the UKGC.
How have the casinos reacted to the proposals?
The UK industry body BGC has strongly criticised the soft deposit cap, stating that the £100 proposal is “arbitrary and random” and that “no other sector faces comparable limits” (although it’s interesting that the Council seems to object to the size of the limit, rather than the existence of a limit). The BGC also points out that the industry already carries out “robust and improved affordability checks”.
On the other hand, the BGC seem happy with the kitemark suggestion, and the zero-tolerance approach to offshore competitors.
GVC (owners of Ladbrokes and Coral) pointed out that the gambling industry employs a significant number of people in the UK and that the company is in the top twenty taxpayers in the country.
How likely are the proposals to become law?
SMF is a cross-party think tank, and it does have some clout within government circles – so some of these proposals have a strong chance of being adopted to some degree. What’s more, the response from the UK gambling industry seems to be a resigned one – they know these changes are coming, and now just want to help define the actual monetary amounts. And large UK operators like GVC and William Hill know that if the offshore sector can be severely restricted, they can use their muscle to dominate the British market.
Once Brexit is out of the way, it is very likely that slot stake limits will come into force in 2021, and possibly also the soft deposit caps suggested by the SMF. It is almost certain that depositing money at your favourite casino will be a much longer and cumbersome process than it is today.
What are some possible side-effects of these measures?
New pieces of legislation rarely work out exactly the way governments intend them to. Depending on how restrictive the legislation on deposit and stake limits ends up, we see many unintended consequences ahead.
Primarily, these proposals would be a big gift to the large grey market of unlicensed operators who don’t bother acquiring a UKGC licence. And the likes of William Hill know very well that restricting offshore operators is very difficult to implement in practice. To see this, you only have to look at Sweden’s channelization strategy which even their own gambling authority admits has been a colossal failure. Or look at the US market, where Costa Rican sportsbooks like 5Dime have been operating freely for years.
To really crackdown on offshore gambling, the authorities would need to stop financial intermediaries from allowing customers to deposit at unlicenced casinos. But if the government ends up going down that route, it will add further fuel to the boom in crypto casinos.
Moreover, these restrictions could have a major negative effect on UK licenced casinos that offer large welcome bonuses. Due diligence checks on 100% up to £500 deposit offers would cause severe difficulties to operators who rely on these kinds of sweetener deals to tempt new customers through the door.
As the SMF themselves admit, the vast majority of UK customers do gamble responsibly. And for these customers, the coming changes seem to pose a severe risk of directing them towards Bitcoin casinos operating out of places like Curacao.