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This is a period in which the UK gambling industry is in flux. The events of the past few years have accelerated the shift towards gambling online rather than at real-world physical outlets.
That process has been so rapid and dramatic that land-based gambling outlets like casinos now welcome any signs of stability in profits and in their share prices. By contrast, online gambling is growing but new regulations introduced by the government could affect that.
Therefore it is a time of some uncertainty for the industry. That makes forecasting the future difficult but we will look at some potential developments.
Online Gambling Taking Over
There had long been signs that gambling online was becoming more popular than visiting real world casinos or bookmakers, but the past few years have confirmed it. Between April 2020 and March 2021 there was a 14.8% drop in the number of UK land-based bookmakers and casinos compared with the year before.
Equally the Gross Gambling Yield (GGY) for these outlets fell by 62.5% during that period, to £1.7 billion. By contrast, the GGY for the online gambling sector rose by 18.4% to £6.9 billion in that year compared with the previous one.
Of course the lockdowns imposed by the Government were a big reason for that, but not the only factor. Digital outlets benefit from general convenience and attractive offers, such as casinos offering deposits as low as £5.
It is almost impossible for land-based outlets to compete with offers of this kind, due to the much higher overheads that are involved in maintaining their operations. That contributed to the declining numbers of these outlets during the 12-month period of research by the Gambling Commission. The overall number fell to 8,625, with bookmakers being hit particularly hard; their numbers declined by 15.9%.
That is partly down to the absence of sport during the lockdowns, with some of these companies going out of business due to that. However it is important to point out that the trend in the UK towards online gambling began before Covid-19 and the wider world events during 2020 and 2021 only sped up the process.
The development of mobile apps by casinos and bookmakers made placing bets even easier. The very small deposit requirements at many online sites also make them an affordable way of enjoying betting now, when more people are facing rises in living costs.
The Impact of Inflation
Those increases in inflation and the cost of living are among the biggest challenges that the UK gambling sector is facing in the immediate term. The majority of people are simply going to have less money to spend on all forms of entertainment, including casino and sports betting.
The most recent Gambling Commission figures show that it is online casino that accounts for the biggest share of the £6.9 billion GGY. It is responsible for £4 billion, with £2.9 billion deriving from the ever-popular slots games.
That makes slots tremendously important to the industry and a lot of money is spent on developing new ones with themes that will retain customer interest. Online casinos are also using AI technology to monitor and analyse the choices of their customers so that they can provide more closely tailored services.
That is likely to be stepped up as those customers face greater financial pressures.
Looming Regulatory Changes
The other factor that makes the future more uncertain is the planned regulatory changes. These will see laws tightened to safeguard customers against problem gambling at a time when smartphones have made access easier than ever.
They will include a levy on gambling providers that will be used to finance research and treatment for the issue. However, more significantly, they will impose betting limits of £2 and £15 on slots games.
The £2 maximum betting amount per spin would apply to those under 25, while £15 would be the maximum for those above that age. Given the importance of slots revenue to the sector, this aspect of the regulatory reform is something that the industry may view with some concern.
The new rules could see casinos required to make games slower to reduce the sums bet by players too. So there is a real possibility that GGY will be affected at a time when the online casino sector is more central to the industry than ever.
This is a period of uncertainty for the gambling industry, but it has proven highly adaptable to change in the past.
