White paper: Not gone, but already forgotten? – Regulation

In an incisive commentary, Wes Himes, Senior Adviser at the Betting and Gaming Council, warns that the renewed calls for gambling regulation reform in the UK could jeopardize the progress made with the recently released white paper.

Recent headlines in the UK media suggest a growing pressure on the government to initiate another review of gambling regulations. This push seems to stem from a concerning collective amnesia regarding the current administration’s support for the 2023 white paper review, whose proposals are only just beginning to be implemented.

It’s important to recognize the significance of the white paper, which encompasses 62 measures affecting every sector of the gambling market. Described as a “once in a generation” reset, it’s designed to balance customer freedoms with enhanced safeguards for the minority who experience gambling-related harm.

£100 Million Annual Funding for Research, Prevention, and Treatment

Since the implementation of the statutory levy on April 6, 2023, the industry is set to generate £100 million ($134.1 million) annually for research, prevention, and treatment (RPT) initiatives aimed at mitigating problem gambling and related harms.

The Gambling Commission will manage the funds, which are expected to be disbursed by October 1, 2023, for the 2025-26 levy period. Collaborations with UK Research and Innovation, the Office for Health Improvement and Disparities, and the NHS will focus on commissioned programs tailored to RPT. This initiative nearly doubles the funding from the previous voluntary levy, signaling a transformative shift in how RPT is approached. Key questions remain regarding governance of this new system—specifically how to ensure transparency, eligibility, and trust among stakeholders.

The substantial funding may attract attention from newcomers eager for grants, especially as long-standing RPT providers must not be overlooked in the process. Better Change has issued a report offering valuable insights on governing this new, financially robust system.

Impact of Stake Limits on Gross Gambling Yield

A significant overhaul of online slot stakes took effect recently, imposing a £5 limit for players over 25 and a £2 limit for those under 25, effectively eliminating the previous system of unrestricted staking. Notably, average stakes across the market were already below £2 per spin.

The government projects that these new limitations will translate into a £181 million reduction in operator gross gambling yield (GGY). The industry’s response will be critical—not just in terms of players adjusting to these caps, but in understanding whether they might exit the regulated market altogether. While a shift in player behavior is expected, the magnitude of this change remains uncertain and will be assessed in due time.

Changes to Marketing Regulation in the UK

On May 1, 2023, new direct marketing regulations were established through updated conditions and codes of practice mandated by the Gambling Commission. These changes allow operators to tailor their marketing strategies based on customer preferences for products and channels, thereby enhancing consumer engagement.

A subsequent set of marketing rules is on the horizon, aimed at regulating the number of plays required to redeem bonuses and preventing the bundling of inducements across different products. These measures will consequently impact how advertising is distributed in the market.

Additionally, reforms targeting land-based casinos are progressing through parliament, addressing outdated machine allocation policies and permitting all venues to offer sportsbook services. These initiatives are anticipated to be enacted early in the summer of 2024.

While these represent just a fraction of the anticipated changes through 2025, ensuing reforms will include continued legislative updates, stakeholder agreements, and new Gambling Commission initiatives.

The Pitfalls of Further Regulation

The government estimates that the white paper could significantly boost online sector GGY by approximately £584 million to £914 million. This figure remains uncertain until all measures are fully implemented and a reliable evaluation methodology is adopted. NatCen has been appointed as the primary evaluator, yet the transparency surrounding their evaluation process leaves much to be desired. Critical questions include the selection of a baseline year and methods for measuring displacement toward the black market.

Importantly, the impact of the white paper on the market is substantial and will persist for years. Calls for additional restrictive measures before the full implementation of the white paper risk undermining five years of careful political negotiation and policymaking aimed at striking a balanced approach.

A Call for Stability

While some stakeholders may have prematurely counted the white paper as a foregone conclusion, it is crucial to note that the gambling sector remains under scrutiny. The Advertising Standards Authority is currently reviewing their recently implemented rules regarding “strong appeal” and celebrity use in gambling advertising. Meanwhile, the Information Commissioner’s Office is investigating issues related to cookies and online tracking. The Gambling Commission is also conducting early assessments of fair terms in contracts, with the Treasury exploring the introduction of a unified online gambling tax.

The gambling industry, despite constituting a small segment of the UK economy, continues to attract disproportionate regulatory focus. This scrutiny creates volatility and uncertainty for operators seeking stability in an increasingly complex environment.

It would be prudent for stakeholders to allow the white paper and its subsequent evaluations to unfold before pursuing further regulatory changes. The imperative to bolster consumer protection remains, but “once in a generation” reforms should indeed signify a pause in legislation. The Gambling Act does not warrant another review— the framework is in place, and the industry should be allowed the opportunity to implement and navigate it effectively.

Wes Himes is a Partner at Intrepid Partners and Senior Adviser at the Betting and Gaming Council (BGC).