On the cusp of an election, the UK’s gaming industry braces for more change By Andrew Tottenham, Managing Director, Tottenham & Co December 4, 2019 at 2:56 am The UK Gambling Commission (UKGC) has published its biannual report on the gambling industry in Great Britain. In the year which ended 31 March 2019, it’s been a bit of a mixed bag, with some sectors of the industry seeing growth, albeit fairly anaemic, and others seeing declines in revenue. Land-based casinos were the sector that was hardest hit, with year-on-year revenues declining from £1.18 billion to £1.06 billion, a decrease of over 10 percent. The fall in land-based casino revenues is primarily due to the severe plunge in the number of customers, mainly Asian, in the high-end London casinos which cater to international VIPs. During the reported period, GGR for London casinos fell from £243 million to £167 million. One casino, Les Ambassadeurs, accounted for almost 90 percent of this drop. The rest of London’s non-VIP casinos saw a 13 percent decline in GGR during the year being reported. Les Ambassadeurs had been very successful in attracting VIP customers, in part because of its willingness to accept very high betting limits on table games. The casino has approximately 60 percent of the high-end London market and almost 12 percent of the total British casino market. When Les Ambassadeurs sneezes, the high end London casino market catches a cold (with apologies to Metternich). By contrast, all of the other regions, except the South, saw only single-digit percentage drops for land-based casinos. The Southern region saw GGR increase by 5 percent to £82 million. Asian and Middle Eastern VIPs are declining to play in London’s casinos and most other casinos in Europe, due to current anti-money laundering processes in those countries. Many high net worth individuals are not prepared to provide the information that casinos are obliged to request about sources of wealth and sources of funds. These are not just one-off requests, either: records have to be continually updated, since a customer’s circumstances can certainly change between visits. So European casinos that have less stringent requirements are seeing double-digit growth in GGR. Total remote gambling GGR (casino, betting, and bingo) for the UK experienced a very slight decrease, down 0.6 percent to £5.32 billion. Remote betting declined 10 percent to just over £2 billion and remote casino GGR was up over £100 million to £3.1 billion. Almost 70% of online casino revenues comes from slot games, which have no limits on stakes or prizes, whereas similar games in land-based casinos are limited in number to 20 per venue and a maximum prize of £10,000. It really is a strange world! The retail betting business was almost static, up 0.1 percent at £1.3 billion, which was offset by a similar decline in GGR from the machines in these venues (FOBTs or B2 machines and B3 machines), down 0.1 percent to £1.8 billion. It must be noted that the reduction in the maximum stake to £2 took effect in the period after this report, so it will be interesting to see, in UKGC’s next report, how machine numbers and revenues have been impacted. There is a school of thought that says that although some customers will be put off by the lower bet limit, others will adjust their playing habits to accommodate the limit. In other words, unable to increase their bets, they will just play for longer. In a large venue with plenty of machines this would not matter too much, but when bookmakers are only allowed 4 machines per venue, it would mean that all machines will be occupied for longer periods. Then some customers will not be able to get on a machine to play, leading to a decline in GGR. It appears a similar thing happened when smoking bans were introduced. Initially there was a significant drop in GGR, in some countries by as much as 20 percent, because people were outside smoking rather than inside playing on the machines or at table games. After a period, the revenues started to return as people adjusted. They had a playing budget and so either they increased their bets and/or played for longer, in smoke-free premises. The debate over gambling in the UK has not died down. Far from it, the election to be held next week has each political party setting out their stall as to what they would like to see happen. Whichever party wins the election, or even if it is a hung parliament, there will undoubtedly be action taken to change gambling laws. Perhaps the scariest prospect for the industry is that the Conservative Party, supposedly a party of free enterprise, has announced that if they win the election, they will conduct a review of the 2005 Act. It isn’t so much as to what was proposed to be reviewed – all parties have said similar things, regarding machine bet limits, gambling using credit cards, and so on – but who would do the review. It looks as though gambling policy under the Conservatives will be developed by the Department of Health. When the DoH gets involved, policy becomes preventionist, trying to minimise harm, which means the use of things that might cause harm. This is hardly good news for an industry that provides entertainment to most of the UK population and employs over 100,000 people. When we wake up on December 13 we will know if this nightmare scenario is likely to become a reality.