Now & Near Future Concerns for the Betting Industry

The betting industry has certainly had its fair share of challenges so far in 2020. However, even with some pro sports leagues tentatively returning to the field after the coronavirus lockdown, the struggles are far from over.

Not only is there the potential for a second COVID-19 outbreak to shut everything down again, but UK bookmakers, especially the bigger bookies in the business, may be forced to deal with new regulation issues with the proposal of a mandatory levy.

Continual COVID-19 revenue challenges

To start, COVID-19 concerns are far from over. Like many businesses around the world, sportsbooks have yet to shake out of the profit-sucking clutches of the virus. Although football in England has resumed and other major professional sports leagues around the world are starting to test the waters to salvage the remainder of their seasons, bookies simply can no longer afford to put all their eggs in one basket and bet on football being their cash cow.

For instance, Ladbrokes football betting service is considered one of the staples of the industry, but even Ladbrokes has not yet fully returned to normal. Like so many other bookies, it placed more focus on the promotion of its virtual sports, eSports and casino offerings when traditional sports went on hiatus, and it is likely to continue to do so, even with the return of its big markets.

The reality remains, until the pandemic crisis is over, at any time traditional pro sports could be put on hold again or cancelled if another outbreak occurs. As such, while bookmakers are finding their new normal, they are unlikely to forget the other betting markets that helped them to draw in punters in the spring.

COVID-19 gambling behaviour challenges

The effects of the coronavirus on the iGaming industry has also brought other challenges, including its major impact on customers and their betting behaviours. Although the overall participation in gambling has decreased during the pandemic, data released by the UK Gambling Commission has revealed that some players have been spending more time and money gambling on certain products.

This data that has been collected reflects the first full month of lockdown in April. The data covers an estimated 80% of the entire online gambling market. It was taken from submissions of the biggest online operators and the YouGov COVID-19 tracker, which covers weekly representative samples of circa 2,000 UK adults.

In light of this data, the Gambling Commission has strengthened its guidance to operators, requiring them to be more vigilant with affordability checks, preventing reverse withdrawals and limits on bonus offers.

Regulation challenges – possible mandatory levy

Aside from the pandemic, regulation is also a concern for betting brands. The challenge that continues to plague the UK online gambling industry is the call for the government to impose tighter regulations to reduce gambling-related harm.

A recent report from the House of Lords says that smartphones and the exploitation of “soft-touch regulation” by gambling operators is contributing to a “perfect storm” of 24/7 addictive gambling behaviour.

Committee chairman Lord Grade said that the gambling industry’s regulations are lax and need to be replaced by a regime that prioritises the welfare of gamblers ahead of the industry making profits.

However, the CEO of GVC Holdings, Kenny Alexander, argues that GVC, which owns Ladbrokes Coral, has improved player protection policies by reducing the amount of money that GVC spends on advertising and increasing the amount of money spent on funding for problem gambling research.

According to Alexander, it is important for brands to make it clear that they have improved their player protection policies, because imposing heavier regulations won’t only damage the industry but “will ultimately drive customers into the hands of the unregulated black market.”

Still, many feel that the UK gambling industry is not doing enough to prevent gambling-related harm. In fact, a group of over 40 academics and addiction experts want a 1% mandatory levy imposed on the gambling industry, with the proceeds from this tax to be distributed through established independent bodies like the National Institute for Health Research and the UK Research and Innovation.

This mandatory levy, which was proposed last year (2019), would require the industry to increase the amount of funding they allocate to improve prevention, education and treatment services, instead of paying the current voluntary levy that is equal to 0.1% of their revenues.

According to The Guardian, last year, betting firms Bet365, William Hill, GVC, SkyBet and Flutter pledged to redirect £100 million of funds for tackling problem gambling. That said, these funds have not yet materialised. Moreover, last month (June 2020), the industry decided to change the direction of this funding at short notice. Instead of the money going to Action against Gambling Harms(AGH) where suitable recipients would be identified and issued grants, which was the original intention, all the funds will now be given to the GambleAware charity.

The trouble that experts have with betting firms being in charge of where the money goes is that it allows them to have too much influence on how the money is spent (e.g. giving it all to one organization of their choosing). This is why they feel the levy is needed.

From COVID-19 to the threat of an imposed levy, with all the various challenges the betting industry is facing, it does not seem as though it will be smooth sailing for bookies any time soon.