There have been some big shake-ups in the online gambling world recently, with some key industry specific changes as well as wider developments that have forced online gaming providers to reassess both their situation and strategy. The increased regulations by the UK government regarding online gambling has definitely had an impact on the industry. In Europe, the ambiguity and uncertainty of Brexit is making it difficult for anyone to have any sort of long term game plan. The recent tax legislation implemented by the EU Court has resulted in offshore tax havens, specifically Gibraltar being targeted. It appears the status quo is about to change and it seems certain that the UK gambling industry will see some big changes over the next few years.
Business and Politics
In a climate where both the political and business stories have been a total rollercoaster, with a predilection towards continued austerity, there are no surprises that more tax is being sought from an industry worth £13.8 billion. Although online gambling has become more widespread and openly advertised, it still has opponents who believe a choke-hold on profits should be maintained.
Rules and regulations
The UK’s highest profile online casino operators are ensuring that they are conforming to regulations by employing responsible gaming measures and preventing compulsive gambling. They provide self-set limits, self-exclusion and protect minors, in addition to all of this they must guarantee fair gaming, 888casino is a fine example of an online casino that conforms to all of the latest regulations. The regulations require online operators to ask the players for their source of funds as well as what is their occupation which makes it harder to keep the customers as some players don’t care for this line of questioning.
Although it is becoming increasingly difficult to maintain an online gambling site it is an extremely lucrative business. Increased regulations and changes to taxation resulted in a wave of mergers and acquisitions in order for casino operators to survive via economy of scale. This means that casino operators can save in costs due to the increased level of market share. 888casino are just one of many casino operators that have been subject to a multi-million pound bid, William Hill tried to buy the company however it didn’t materialise. Following this 888casino themselves tried to acquire both Bwin and William Hill, this was also an unsuccessful attempt.
Tax changes
June saw a landmark decision made by the European Court of Justice, in which online gambling operators based in Gibraltar that provide a service to the UK should not have tax privileges. This is due to the territories being seen as one entity, with corporation tax on the British overseas territory set at 10% and only 1% paid on all bets placed. This is a blow not only for gaming companies, who made need to look elsewhere in what is a competitive market with tight profit margins, but also the Gibraltarian economy, which relies heavily on overseas investment, especially from the gaming industry.
The future
Brexit is also looming on the horizon, a process which is yet to reveal its full hand. Many businesses are watching and waiting to find out what it could mean for their international operations, whereas others are carrying on as usual in the hope that the effects won’t be as severe. One thing is for certain, in that organisations will have to review how business is done with the rest of the EU, especially if a trade agreement fails to materialise. Online gambling companies especially run the risk of having to obtain new international licenses or indeed expect a costly and bureaucratic process when operating abroad. The weakened state of the pound is making matters even worse, with no light at the end of the currency exchange tunnel in sight. This uncertainty is only making decisions harder.
One potential opportunity that could be a bright light on the horizon is that fact that an ex-casino owner is now President of the United States. Although there hasn’t been much in the way of communication about changes to the strict gambling rules applied in the US, there could be a potential for more states to relax their gambling restrictions. The legality of online gaming is pretty murky at a federal level, but if a more regulated, liberal approach is taken, the new market opportunities for established operators could be huge.
Although the number of new online casino customers is rising and profits across the industry have been growing year on year, it seems that external influences could be the difference between success and failure for the big players in the online gambling world. Weathering the storm is now likely to be a key objective, especially if the UK takes a more conservative approach to online gambling operator freedom over the next 5 years.
Key points
• The UK Government has extremely strict regulations that regulations that UK gambling operators must conform to.
• The gambling industry is worth £13.8 billion.
• The European Court of Justice has recently changed its tax laws resulting in companies in Gibraltar no longer having tax privileges.
• Increased regulations and changes to taxation resulted in a wave of mergers and acquisitions.
• This allows casino operators to survive via economy of scale.
• 888casino attempted to acquire both Bwin and William Hill.
• The future looks uncertain due to the numerous law changes and the increase in regulations.
