Stake Limits and Levies: UK Gaming Industry Faces Financial Shake-Up

UK government’s have long been promising to reform the gambling industry. The new Labour administration has taken some big steps forward in recent weeks but they are ones likely to hit the profits of UK gambling companies.

The end of November saw the announcement that a new statutory levy on gambling profits is to be introduced. Its aim is to raise £100 million which will be used for gambling-related harm prevention. That’s not all though, a further announcement confirmed the introduction of significantly reduced maximum stake limits for online slots.

With such games being hugely popular with players, the profits of new UK gambling companies will again be affected. From July to September of this year, online casino Gross Gambling Yield (GGY) was £1.32 billion, 11 percent higher than in 2023. Maintaining such high figures when the new regulations are introduced will be difficult.

This year has seen some new additions to the UK gambling industry. Betano has joined the growing industry and is one of Kaizen Gaming’s main brands. Already the successful online casino has become the principal gambling sponsors of English Premier League side Aston Villa.

Also launching in the UK has been EasyBet who are part of the easyGroup. They specialise in sports betting and have partnered with Matchbook who have built up a strong business with their betting exchange.

Last year saw a long-awaited White Paper on gambling reform published by the then Conservative government. In opposition, Labour agreed with most of its contents but the problems in Downing Street and this year’s General Election delayed any proposals being introduced.

The introduction of the compulsory levy was part of the White Paper. Just how much will be paid by UK gambling companies will be between 0.1% and 1.1% of their GGY The sector, type of gambling offered, operating costs and the risk profile of what they offer to their customers will also be taken into consideration.

The Betting and Gaming Council (BGC) were quick to say that there is at present a voluntary system in place. Those introducing the levy argue that not all operators currently pay their fair share with some even paying as little as £1.

The BGC CEO is Grainne Hurst who said that the past four years has seen their members voluntarily contribute over £170 million and £50 million this year. A concern of the BGC is that government ministers “must not lose sight of the fact that the vast majority of people who enjoy a bet each month do so safely.”  In the most recent NHS Health Survey for England, the estimated figure for adults who are problem gamblers was only 0.4%.

The CEO added that her concern is “the tone of this announcement suggests the government is at risk of losing perspective of these facts.” Her view is that they are “simply dancing to the tune of anti-gambling prohibitionists,” something the CEO believes “serves no one.”

As well as the introduction of the compulsory levy, the reduction in maximum stakes for online slots has also had a mixed reception. Those aged below 25 will only be able to stake a maximum £2 per spin. For those aged 25 and over, the new maximum stake will be £5.

There have long been concerns over online slot games. Players are able to lose large amounts of money in a very short time. The games are considered to be very addictive and many of those who seek help for gambling problems mention the difficulties online slots have caused them.

The previous Conservative government had planned to introduce the new limits in September of this year. That deadline passed after the change of government but the new limits will now be introduced next year. The government describes online slots as “a higher-risk gambling product associated with large losses, long sessions and binge play.”

Their hope is the new stake limits will slow the rate of losses that players are making, especially younger ones. Slowing down the speed of online slots and banning autoplay is also being considered.

Online slots contribute a great deal to the GGY of UK online gambling companies. UK Gambling Commission figures for June to September 2024 reported slots GGY of £680 million which was a 16 percent increase on the same period in 2023. The number of spins saw a 13 percent increase to 23.3 billion.

The new maximum stakes are expected to have a major effect on such GGY figures. In the past, the machines seen in High Street bookmakers had their maximum stake significantly reduced. This led to a drop in revenue, redundancies and some shops being closed. Similar problems could be on the way for the online sector of the industry.