Has the UK's gambling yield peaked?

A sea change in UK gambling, and how it will effect revenues
The challenge facing operators is the renewed regulatory approach of the UK Gambling Commission (UKGC), which has recently laid out five key strategies aimed at protecting consumer interests, safeguarding vulnerable gamblers and raising advertising standards. The enforcement of these, along with the creation of more stringent tax levies by the UK government, could well restrict their practices and ability to generate revenue in the near-term.

One of the key targets for regulators in 2018 could well be fixed-odds betting terminals (FOBTs), which exist at land based casinos and generated a gross gambling yield of £1.8 billion in the year ending September 2016. This equates to 13% of the overall industry, but operators should be braced for the fact that ministers want to see the machine's maximum stake of £100 reduced considerably in the near-term. Some experts have even suggested reducing this to just £2, which would have a dramatic impact on the capacity of FOBTs to generate revenue.

Although this is likely to be met with resistance from operators (meaning that the final reduction will not be quite so huge), even a small decline could effect the gambling industry as a whole.

Advertising is another key concern for regulators, particularly given the revelation that 95% of all commercial breaks during live football matches include at least one sponsored gambling message. The UKGC is though to be keen on the idea of banning or restricting this process, in a bid to prevent vulnerable gamblers from being inadvertently targeted with in-play betting ads. Although operators are increasingly inclined to invest their marketing spend online, a reduce presence on TV would at least have an incidental impact on the ability to optimise revenues.

The last word – Why we may have seen the market peak
While these measures are hardly likely to turn a growth market into a declining one, they will have a marginal impact on the ability of operators to generate optimised revenues. This could result in a slight decline in growth rates and the yield of the sector as a whole, meaning that 2016s figures would represent a peak for the market.

This may not be permanent, however, particularly if operators are savvy and able to realign their strategies to match those of the UKGC. Such an approach could well help operators to remain compliant and reinforce their position as ambassadors for responsible gambling, helping them to achieve a larger market share and increase their profitability this way.
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