What’s the Impact of iGaming in the UK?

At Risk Gamblers in the UK

Posted by Harry Kane on Tuesday, November 23, 2021

At Risk Gamblers in the UK

Unless you spend considerable amounts of your time under a rock, you’ll know that there’s a huge focus on the perceived social impact of gambling in the UK (and indeed, across the globe). This is despite the relatively stringent regulatory frameworks that exist in mature markets such as the UK.

Cross-party Parliamentary groups have become increasingly active and keen on legislating in the iGaming space as a way of safeguarding players. In this article, we’ll appraise the true social impact of online gambling, while asking whether the perception of the market and its main participants is fair.

A Brief Overview of iGaming in the UK

Like most developed and western markets, online gambling in the UK first began to bloom at the turn of the century. However, it wasn’t until 2005 and the formation of the Gambling Act that growth was really accelerated, as various forms of wagering were legalised and formally regulated. This act was seen as the liberalisation of gambling in the UK, while it also created significant economic opportunity by increasingly industry profits and the subsequent revenue paid to the Treasury.

As part of the 2005 Gambling Act, the Labour government of the time created an independent regulatory body, known commonly as the UKGC (UK Gambling Commission). To this day, this body oversees licensing and compliance across both on and offline market segments, while ensuring that players are adequately safeguarded at all times.

Over time (and particularly the course of the last decade), the creation of an open and well-regulated market has precipitated huge growth, with accessible verticals such as online slots expanding by more than 300% between 2010 and 2018 alone. Certainly, gambling participation rates have sky-rocketed during the digital age (we’ll touch more on this below), while popular casino verticals have become more accessible than ever before.

Similarly, sports bettors have been able to access global betting markets remotely during the last decade or more, creating a scenario where they’re encouraged and able to wager more frequently. But how does this obvious growth translate into numbers? Well, the iGaming market has enjoyed double-digit growth for years now, while it recently produced a total gross gaming yield (GGY) of £6.9 billion in the year ending March 2021.

Incredibly, this represented a staggering 18.4% increase on the previous year’s figures, while the iGaming sector evolved to command a market share in excess of 39%. This was also helped by the corresponding decline of the brick-and-mortar gambling industry, as the number of land-based establishments continued to shrink during the same period.

Interestingly, the figures also showed that the number of gambling operators active in the market shrank by 5.4% in March 2021. Similarly, the percentage of gambling activities licensed depreciated by 4.6% during the same period, as the offline market has streamlined and the virtual alternative has grown continually.

What are the Social Impacts of Online Gambling?

When it comes to appraising the social impacts of iGaming growth, the most obvious is the increased accessibility of betting markets and casino verticals. As we’ve already touched on, players can now access a full and comprehensive range of casino verticals through their desktop or mobile devices. Not only this, but bettors can also discover a diverse range of global betting markets, across multiple disciplines and tournaments.

At the same time, the digital age has seen the emergence of in-play or micro betting, enabling punters to wager small amounts frequently as the action unfolds. This creates the opportunity to spend considerably more, particularly as large percentages of horse racing, snooker, football and tennis audiences like to wager as they watch.

As a result of these trends, participation rates in the industry have soared thanks to online gambling. This was borne out by a comprehensive study commissioned by the Gambling Commission in 2020, which found that 21% of respondents had wagered at least once during the previous four weeks. This represented an increase of 3% from the previous year.

The survey also found that participation among men (25%) was considerably higher than women (17%), with this continuing an industry trend that has been prevalent for years now. To provide some context, corresponding research from 2006 found that just 3% of the UK population was thought to wager regularly at brick-and-mortar casinos. So, participation rates have increased more than eight-fold in the 16 years since, establishing gambling as one of the region’s most popular pastimes.

The iGaming market is definitely the key driver of this trend, with the volume of online sport bets, casino wagers and horse racing flutters considerably higher than those made offline. But how has online gambling changed behaviour and precisely where punters place their bets? Well, data collated from the UKGC reveals that 95% of respondents now prefer to wager from home, while 15% also choosing to bet at work via their mobile device.

A further 12% wager regularly using their smartphone during the daily commute to and from work, with 7% betting at pubs or clubs and 4% doing so at designated sports venues. This further highlights the increased accessibility of online gambling, particularly among casual gamblers who like to wager while on the move.

Of course, higher participation rates and increased accessibility to casinos and sportsbooks are often linked with widespread problem gambling. More specifically, it’s argued that digitisation of the market has normalised the practice of gambling, while enabling people to wager more frequently potentially spend higher amounts over time.

The suggestion here is that the risk of problem gambling becomes more prevalent in society. However, while it stands to reason that the incidence rate of problem gambling should increase in line with rising participation rates, the question that remains is how big a societal issue does this represent?

The figures on this are quite clear. Based on 2018 data gathered by the UKGC, it was estimated that just 0.5% of the total population reached the threshold to be considered ‘problem gamblers’. More recent evidence indicates that this proportion has actually remained relatively since 2012. The same can be said for those in the ‘at-risk’ category, with this number having hovered around the 3.8% mark for a while now.

At-risk gamblers are usually low or moderate-risk bettors, who may experience some level of negative consequences (on a temporary basis at least) as a result of their gambling. As we can see, these figures are relatively low and largely unchanged over time. This trend is also prevalent over the course of the last decade, suggesting that problem or at-risk gambling hasn’t increased proportionately to participation rates.

From this, we can deduce that iGaming hasn’t necessarily expedited an increase in problem gambling, and its potential for societal harm has been largely overestimated in this respect. If we want further proof of this, we need only look at the average spend of gamblers in the UK. Incredibly, the average player bets just £2.57 week (across lotteries and other iGaming verticals) and £133 annually, distinguishing gambling as a manageable pastime rather than a socially harmful practice.

However, the prevalence of online gambling and its lucrative nature has arguably created an issue in the form of VIP gamblers. This was explored through a report commissioned by the Gambling Commission, which found that a large number of operators were heavily reliant on a select few customers for their revenues.

For example, one operator was believed to take an incredible 83% of all deposits from just 2% of its customers. One of its rivals took 58% of its total deposits from 5% of its customer base, while another accepted 48% of all deposits from 3% of registered players. These gamblers are commonly known as ‘VIPs’, and this high-rolling demographic is widely incentivised to spend considerable amounts of cash in exchange for lucrative and targeted rewards.

Clearly, this small percentage of VIPs do wager considerably more than the UK average, while there are 47,000 such gamblers currently active on these shores. Interestingly, some 8% of this demographic are thought to be problem gamblers, with this percentage noticeably higher than the rate among the wider public.

This is indicative of a potential societal problem, albeit one that targets a relatively small number of players. However, it can be argued that online gamblers also have far greater access to responsible gambling tools than ever before, thanks in part to the efforts of the UKGC and their commitment to safeguarding the region’s most vulnerable players.

It can be argued that this is a positive societal impact of gambling in the digital age, as operators have been compelled to proactively safeguard their customers and equip them with practical tools to help them manage their activity. This is best embodied by the imposition of deposit limits, which are now deployed at every online casino (or sportsbook) and can be controlled by individual players.

Players are asked to set their daily, weekly or monthly deposit limits when they register their accounts, in line with their bankroll and unique financial circumstances. Ultimately, the goal here is to ensure that you never deposit or spend more than you can afford to lose within a particular time-frame, regardless of any winnings that you’re able to bank and the return on your bankroll.

This type of measure is unrivalled in traditional and offline gambling settings, where players would only be banned by establishments in instances where they ran up debt or were found to be cheating on the floor. When gambling online, players can now effectively protect themselves and tackle signs of problem behaviour before they become insurmountable.

The online gambling industry also features the GAMSTOP initiative, which is an independent scheme that has been designed to enable self-exclusion among players. Once registered, players will be prevented from gambling at websites and casinos online, for a period of anywhere between six months and five years.

Initially, the GAMSTOP initiative saw up to 50,000 people in the UK signup following its launch in April 2018. However, it ran into some initial opposition, after it was revealed that players could circumnavigate the program simply by registering at a casino with a new email address and username.

What’s more, it hasn’t historically been compulsory for online casinos to register with the scheme, creating potential pitfalls and opportunities for players to register with such brands while receiving direct marketing material (both on and offline). Things have changed recently, however, as the UKGC recently changed its guidelines to ensure that participation with the GAMSTOP initiative was mandatory among operators licensed in the UK.

The initiative also tightened up its operation and methodology, making it hard for self-excluded players to gain access to any online casino on these shores. This is another positive and increasingly effective social impact of online gambling, as it’s easier than ever for players to exclude themselves from gambling activities and address problem or at-risk behaviour head-on.

The Last Word

As we can see, the extent of problem gambling hasn’t necessarily increased markedly in the digital age, despite the proliferation of iGaming and increased accessibility to virtual casino gameplay and remote sports betting. However, the risk posed to so-called “VIP gamblers” at the propensity of this demographic to develop problematic behaviour has caught the attention of legislators in the UK.

As a result, cross-party Parliamentarians have recently joined forces to make a number of regulatory proposals, aimed at tackling gambling related harms. Known as the All-Party Parliamentary Group (APPG) for Gambling Related Harm and featuring prominent politicians such as Iain Duncan-Smith, this body has proposed imposing a maximum bet limit of £2 on slot games and capping each players monthly spend at £100.

While these measures may not come to pass, the numbers suggest that they’d largely be unnecessary, especially when you consider the truth about problem gambling rates in the UK and the average annual spend per individual player. This is why it’s crucial that further and more level-headed investigation is carried out into the nature and extent of gambling related harm in society, so that legislators can propose effective measures while simultaneously safeguarding an industry that employs millions nationwide.

Author: Ryan Richardson