Posted on: March 10, 2023, 06:47h.
Last updated on: March 13, 2023, 05:48h.
Gaming operators in the UK, are waiting on the government to present its gambling white paper. While there’s still a chance for another delay in its release, UK Culture Secretary Lucy Frazer believes that it might arrive within the next three weeks.
Reportedly the biggest reform in almost 20 years, the UK’s new gambling framework is expected to include several major changes. The delayed reforms, now nearly three years late, are causing frustration and even stagnation in the gaming industry.
The House of Commons will adjourn on March 30 for its annual Easter vacation and won’t return until April 17. Releasing the white paper immediately after lawmakers come back into session is considered an impossibility.
The lack of momentum is taking its toll. Rumors of mandatory affordability checks, new taxes, and strict spending limits are already forcing gaming operators to make changes, leading to serious reductions in income and, subsequently, tax revenue.
Reforming the UK’s gaming industry began in earnest at the end of 2020 with an attempt to update laws that had been on the books since at least 2005. On Thursday, speaking in the House of Commons, Frazer said the government will release the reforms “shortly.”
This echoed last week’s “soon” given by the Department for Culture, Media and Sport (DCMS) overseeing the update. But, if the government can’t produce the white paper by the end of the month, it won’t be able to do so until May.
Racing Loses Ground
The British horse racing industry is one of the victims. Horse racing has always been wildly popular in the country. But the industry believes it has lost at least £40 million (US$47.77 million) in revenue.
This is partly due to the new white paper’s absence and the UK Gambling Commission (UKGC). The gaming regulator has increased restrictions to fill the void, leading to changes in betting sentiment.
Next week’s Cheltenham Festival will help provide a thermometer for race betting. Recent betting activity has transitioned away from online and retail betting points in favor of bookmakers at the tracks, according to the Racing Post. This is because the latter can get away with sidestepping the rules.
Gaming Operators on Hold
In a financial health update this week, gaming operator Entain, one of the largest in the space, reported a loss of £100 million (US$119.44 million). This was partly due to a significant drop in online activity spurred by the UKGC’s activity and the rumor of forced affordability checks in the white paper. This drop, the company admitted, is because more people are choosing platforms that don’t enforce as much oversight.
You are not far off £100m of revenue impact, so it is a significant number for sure. It is really important to point out to [the UK Parliament] the damage that is being done here because, of course, these customers are not stopping betting and it’s ludicrous to think they are,” said Entain CFO Rob Wood.
Certain mergers and acquisitions, like those involving Entain and MGM or DraftKings, have recently failed because of the uncertainties in the future of UK gaming. Entain CEO Jette Nygaard-Andersen admits that “certain headwinds” in the UK market are causing trouble for the industry.
While the company asserts it is still strong, it reported a 92.5% drop in net profit for 2022. The final total was $23.3 million. Net gaming revenue, however, increased 11.9% over 2021 to $5.15 billion.