The outlook for UK online gaming

One of the most significant details to emerge from the UK Gambling Commission’s latest Industry Report, covering the period October 2015 to September 2016, is the continued growth of online gambling at the expense of traditional gambling; and the fact that online gambling produces the greatest gross gambling yield (GGY) out of all the GGY for the period from online or internet gambling (called remote gambling in the report) was £4.5 billion, or 32% of the entire UK gambling market.

Of this, online casino games (predominantly slots) accounted for £1.6 billion, with sports betting contributing £1.9 billion.

Following on from the Industry Report, there are not expected to be any moves from the UK government or the Gambling Commission to place further significant restrictions on how online gambling operates in this country.

Another report issued in June 2017, entitled Remote Gambling and Software Standards, did outline 17 proposed changes for conducting online gambling, but these are largely operational and it is not anticipated that they will impact in any overly negative way on the industry.

The proposals include standards for the RTP on free online slots and other games matching more closely the payout percentage when you play for real money, as well as publishing RTP data that is more up to date and reflects how a game is currently playing, but overall they are more directed at operators’ responsible gaming policies rather than proposing any sweeping legislative changes.

There are also some moves afoot by the Competition and Markets Authority to take action against online casinos and sports books who are not delivering on the terms of their Welcome Bonus offers, but nothing has yet materialised in this space.

Furthermore, there has been additional good news for the online casinos with the re-introduction of real money gambling apps into the Google Play store.

With Android smartphones and tablets having a 46.94% market share in the UK (as of May 2017), the wider availability and greater accessibility of Android casino apps will be huge boost to the industry, increasing the ease and convenience of playing at mobile casinos, and giving online operators another competitive edge over their land-based rivals.

Therefore, with a strong GGY and in the absence of significant legislative reform, it’s reasonable to forecast continued growth for the online gambling sector.

This confidence would seem to be shared by the industry, if recent increases in the number and size of software developers continues adding to the many new and established UK online gaming operators.

The outlook for land-based gambling

The UKGC Industry Report also found that that the GGY from land-based betting in Britain in the period October 2015 - September 2016 (excluding the National Lottery) was a little over £5.69 billion. Sports betting, predominantly on football and horse racing, was the largest component with a GGY of £3.4 billion, with betting in land-based casinos the second biggest at £1.19 billion.

What’s notable here is that more money in being wagered by UK punters at online casino sites rather than traditional bricks and mortar venues, and that the planned growth for the casino industry, both in the number of venues across the country and their size, has not materialised.

In fact, at the time of the report, the number of UK land-based casinos (at 147) was one fewer than it had been six months earlier. Plans first introduced in 2001 to create super casinos across the country have also floundered, with only four of the proposed eight currently in operation, the most recent to open its doors being the Victoria Casino in Leeds city centre.

In addition to stagnating growth in the land-based casino sector, there was also a 1.4% decrease in the number of betting shops, a 5.7% decrease in the number of bingo halls, and a 5.3% drop in the number of licensed arcades in Britain between March and September 2016, further emphasizing the shift towards all forms of online gambling.

It’s also true to say that the land-based gambling sector appears to be under closer government scrutiny and facing more legislative hurdles than its online counterpart.

Fixed odds betting terminals (FOBTs) in particular are facing growing hostility from the political class, the press and the general public, particularly after statistics revealed that individual players lost more than £1,000 on FOBTs in the UK on 233,071 occasions.

Opposition to FOBTs continues to grow, despite the fact that the number of machines is now capped at four per shop, and there were vague promises before the last general election by all parties of putting betting and/or loss caps on all FOBTs, although Chancellor Phillip Hammond appears to have rowed back from that after taking into the account the hit the nation's coffers would take, with bookies paying 25% duty on all machines.

When taking all of this into account, there would undoubtedly seem to be a shift in the nation’s gaming habits, and that bricks and mortar casinos and betting shops are not necessarily responding to the challenge as quickly or as effectively as they might, if their falling share of GGY and the failed introduction of more casinos around the country is anything to go by.

The outlook for online vs land-based casinos

The ‘visible’ betting aspect of super casinos and FOBTs could be playing a significant role in fermenting public opposition against traditional land-based forms of gambling.

It would certainly seem to account for the failed rollout of super casinos across the country, and perhaps is also a reason as to why GGY growth in this sector has not matched that of its online rivals.

Local authorities have also shown significant reluctance to have casinos introduced into their communities, with the support of anti-gambling activists and charities, and so with mounting levels of concern it’s hard to be overly optimistic about the sector’s future.

On the other hand, it’s much easier to take a rosy outlook when looking at the future of online gambling in the UK. As we move more and more of our lives online, the rise and rise of the online casino likewise seems hard to stop.

Since the formation of the UK Gambling Commission, the regulation of offshore operators, and the introduction of the point of consumption tax, there have been few significant legislative barriers put in the way of online casinos, and so if one was to have a punt on which of the two sectors has shown the most growth when the next UKGC Industry Report rolls around, the safer of the two bets should be pretty clear.