Category: News

Sportsbook operators in Spain took a beating in 2020 thanks to the combination of the novel coronavirus (Covid-19) pandemic, and the nation’s gambling regulator and Ministry for Consumer Affairs clamping down on the industry’s main source of customer acquisition and brand recognition.

The number of restrictions announced on marketing for gambling were such that by the end of this year they will result in a de facto ban on gambling advertising across almost all channels.

Though the initial draft regulations published by the Spanish government last February seemed to be less damaging for sports betting than other verticals, by the end of last year it had become clear that there was to be no special treatment for sportsbooks.

The draft regulations proposed that advertising on TV and radio could only take place between 1am and 5am, but with an exception for ads around live sports events. However, the plan for advertising around these to be allowed between 8pm and 5am was removed from the updated draft provided to the European Commission in July.  

In addition, the original proposals for stricter regulation of sponsorships became a complete ban on sponsorships, while a €100 bonus limit turned into an outright ban on new player incentives.

The majority of the provisions of the Royal Decree on the Commercial Communications of Gambling Activities, which was passed in November, have not come into force yet, but it’s fair to assume they will be hugely damaging for sportsbooks. 

A look at what happened to the Spanish igaming market in the second quarter of last year, when the government had introduced temporary advertising bans because of Covid-19, provides a hint of what’s to come.

Between April and June, the number of active players was down 29.4% on a quarter-on-quarter basis and 25.3% on a year-on-year basis.

More worryingly, the number of players who registered during the quarter had more than halved since Q1 and was also down 41.5% on the second quarter of the previous year. The number of players who registered in May was the lowest monthly total for more than four years.

Sponsorship hit

Given that the advertising ban will now extend to sponsorships, it will be damaging not only for gambling operators, but also sporting associations. The gambling industry is the biggest sponsor of clubs in Spain’s LaLiga, with 35% of the current shirt sponsors in the league active in gaming or betting.

However, in October, Spain’s Ministry of Consumer Affairs wrote to all of Spain’s top tier football teams advising that any sponsorship agreements already in place must come to an end at the conclusion of the 2020-21 season.

And it’s not just the removal of shirt deals that will hurt – according to the European Gaming and Betting Association (EGBA), the sponsorship ban will have a negative impact on 41 out of the 42 teams that make up LaLiga. It comes at a particularly bad time for clubs, which EGBA estimated had already suffered up to €80m in lost advertising revenues as a result of Covid-19.

Meanwhile, land-based operators have faced their own troubles, with restrictions on opening times and their permitted proximity to schools introduced, along with an obligation to display health warnings at the doors of their venues. 

At the time of first mooting the changes last January, the government’s stated aims were to reinforce the self-awareness of players, encourage healthy consumption of gambling products and prevent the beginning of problematic play.

Further, its overarching goal was to reduce industry advertising to a level “similar to that of tobacco products”.

‘An ideological law’

The changes may be well-intentioned, but online operator association Jdigital believes the new laws will prove counterproductive. 

“The main measures of the Royal Decree that will regulate online gambling advertising have not yet come into force, so we have not been able to see its immediate effects,” Jdigital’s chief executive Andrea Vota says. “However, we have always emphasised that the main consequence of this regulation is the ban, de facto, of commercial communications of this activity in Spain.”

“We are concerned that this prohibition will only lead to an increase in illegal gambling in Spain, leaving users and, especially the most vulnerable groups, unprotected against companies that do not comply with the security and protection measures that the licensed operators we represent do respect.”

In July, following Spanish regulator Dirección General de Ordenación del Juego’s submission of its new regulations to the European Commission, Jdigital published a response to the proposed changes, expressing “bewilderment” at the stance taken and describing it as “an ideological law, which has no support in data or studies”.

In particular, it said there was no official data or studies showing that there was a public health problem related to gambling in Spain. Indeed, even the director general of the nation’s regulator, Mikel Arana, appeared to back up this this assertion in February 2021 when he said that gambling was not a health problem for the vast majority of those who gambled in Spain.

As further evidence, a study published in October by the University Carlos III of Madrid (UC3M) found that while 84.9% of the Spanish population participates in some form of gambling activity each year, the country has a problem gambling rate of just 0.3%, one of the lowest rates recorded globally.

Lessons from neighbours

This is not, of course, the first time a European regulator has pushed ahead with an advertising ban that appeared unnecessary. But critics of the new regulations, including Jdigital, have pointed to these previous bans, especially the one in Italy, as examples that Spain’s government should not following. 

All gambling advertising was banned in Italy in January 2019 and it has been estimated that this has resulted in lost revenues of €100m per year for Italy’s Serie A. 

Vota believes the moves in Spain will have a similar effect, explaining that Jdigital’s response was tailored to “highlight the devastating consequences that the decree will have on other sectors, such as sport clubs or media”.

“To get a sense of the losses they can experience,” he says, “in 2019 the industry invested €372m in marketing, and the approved restrictions could see sport clubs lose up to €90m in advertising revenues, according to LaLiga.”

On a more positive note, Italy could also serve as a blueprint for how operators might find ways to work around the changes. For example, in March this year, LeoVegas announced a new partnership with AS Roma for its sports site venture LeoVegas.News. 

As the gambling ad ban does not extend to informational content, this is one way the operator can get its name pitch side without breaking any rules – the LeoVegas.News logo will therefore appear on LEDs during Serie A home matches at the Stadio Olimpico.  

Some Italian operators have also done well by leveraging their retail outlets to advertise their online products since the ad ban came into play. A number of retail brands, such as Snai, Eurobet, Goldbet and SKS365, have benefited from having their brands on display on the high street, with many omni-channel brands increasing their online market shares thanks to their retail prominence.

Indeed, Spanish operator Cirsa, owner of the online Sportium brand, hints that it may be planning to follow suit. “Sportium has been working for months to redesign its strategy to adapt to the new post-pandemic and post-Royal Decree scenario,” the company tells iGB. 

“Our firm commitment to an omnichannel/multichannel model – with a strong presence in all channels – reinforces our position in the new post-Royal Decree scenario.”

Certainly the planned regulations will force the industry to get creative when it comes to reaching and retaining customers. This is likely to extend beyond branding, marketing and advertising, and into the products offered and the way operators engage with customers once they are on a brand’s website or in its venue.

Sweden perhaps provides an example of what the future may hold in this respect, with operators in that country having had to adapt their offerings significantly since the market reregulated in 2019.

The new licensing model brought with it a restriction on bonusing, with licensed operators now only allowed to offer customers one first-time bonus. By and large, sports betting operators have taken this in their stride, innovating on product and UX to hold on to their customers instead of relying on regular bonuses. 

A similar transition from an acquisition-led to a retention-led market model is almost certainly on the cards in Spain. Under the new regulations, Spanish operators can at least offer some bonuses to existing customers, so that should help in their retention efforts.

Sweden also provides a lesson in the dangers posed by overly restrictive regimes, with the country’s channelisation failings attracting increasing attention from both operators and policymakers as the number of players using black market sites rises. 

In this respect, Jdigital’s stark warning that by taking away the rights of licensed operators Spain’s government is unwittingly giving the upper hand to unscrupulous operators that hide their operations offshore would appear to be valid. 

More changes ahead

Yet the advertising controls appear to be only the first step in the government’s ongoing efforts to limit gambling in Spain. In December last year, the Ministry of Consumer Affairs launched a public consultation on a new draft Royal Decree, designed to further increase consumer protection measures in the gambling sector.

Minister Alberto Garzón said the decree would set out standards for action, intervention, control, prevention, awareness raising and treatment for safeguarding players. Bringing the changes into effect would be a key priority for the ministry in 2021, he said.

One of the planned changes could have positive effect on the industry, as there is a plan to integrate Spain’s self-exclusion databases. These are currently maintained separately in each of the country’s autonomous regions. 

The combination of the registers was agreed in September 2020, with regional authorities granted up to a year to complete any technical work necessary to carry out the integration.

Few in the industry would argue against such a move, particularly given the increasing focus on player harm minimisation.

Unfortunately, however, when combined with the ban on advertising by licensed operators, rather than reducing gambling as the government intends, it may simply move activity to the black market.

Arguments to this effect have been made repeatedly by operators across Europe, however, and have mostly fallen on deaf ears. If recent regulatory developments in Italy, Germany and Sweden are anything to go by, Spanish sportsbooks may well have greater hurdles to overcome in the near future.  

Letting the courts decide
Jdigital is so concerned about the unintended negative consequences of the forthcoming restrictions it has submitted an appeal to the nation’s Supreme Court to challenge the regulations. 
However, Vota says he does not expect a speedy outcome. “This is a long and difficult process,” he says, describing the Royal Decree as “a personal warhorse for [Minister for Consumer Affairs, Alberto] Garzón.”
“We will keep defending our arguments and insisting on the fact that the approved regulation is disproportionate, unfair and discriminatory and that the main consequence of this Royal Decree will be, unfortunately, the increase of illegal gambling in Spain,” he adds.
Though no decision has yet been published on Jdigital’s appeal, the striking down of a separate appeal in March is perhaps not encouraging.
Media association la Asociación de Medios e Información (AMI), which represents a group of 80 national and regional media outlets, requested that the introduction of the law be delayed by four months. It wanted the May 1 implementation date pushed back to allow its members to benefit from key events such as the Euro 2021 and the Olympics.
However, Spain’s Supreme Court rejected AMI’s appeal and said the validity of the laws could not be questioned for economic reasons or any other reason other than the public interest.

Figures released by national regulator Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) show that overall online revenue in the three months to 31 December 2020 was up 74.7% from €64.8m in Q4 of 2019.

Sports betting overtook casino games to become the main source of income for licensed operators in Portugal, with revenue from sports wagering rocketing 89.6% year-on-year to €64.1m.

Players wagered a total of €345.6m on sports, up 86.0% on 2019, with football being the most popular sport to wager on, accounting for 86.7% of all bets placed in the quarter. Basketball followed in a distant second with 5.2% of bets, then tennis on 4.9%.

Online casino revenue reached €49.1m in Q4, an increase of 57.9% on the same period in 2019 and the second successive quarter of growth for this segment of the market.

Consumer spending within this market was up 70.0% to €1.41bn. Some 71.1% of online casino bets were attributed to slot games in Q4, with roulette accounting for €12.6% of bets, blackjack 6.4% and poker 4.2%.

Players spent a total of €1.76bn gambling online in Q4, up 69.2% on the previous year.

Some 293,800 new players registered for accounts in the quarter, an increase of 79.3% on the same period in 2019. The SRIJ noted that a further 10,300 people signed up to self-exclude from gambling, with the total number on the list by the end of Q4 standing at 72,400.

The SRIJ also said that it blocked access to a further 49 sites that had been operating without the relevant approvals in Q4, while another 15 sites were ordered to halt activities in the country.

Since the regulator began taking action against unlicensed sites in June 2015, some 675 blocking orders have been distributed, as well as 680 notices to halt operations. 

Revenue for the 12 months to 31 December amounted to €737.3m, down from €1.08bn in the previous year.

OPAP put this down to the impact of Covid-19 restrictions, primarily nationwide lockdowns in Greece and social distancing, with these measures restricting its retail activity in 2020.

Lottery remained its main source of income, despite revenue falling 33.4% to €518.6m due to limitations on retail, with lockdown restrictions in October and November harming performance.

Sports betting revenue also dropped 21.7% to €310.4m, with the cancellation of events earlier in the year having limited players’ options, while video lottery terminal revenue also fell 32.6% to €200.5m and instant and passive 48.2% to €76.3m, both on the back of Covid-19 restrictions.

However, OPAP was slightly helped by the impact of the full consolidation of Kaizen Gaming in the fourth quarter, with revenue from online casino activity reaching €23.9m, the majority of which was generated in Q4.

Turning attention to costs and gaming revenue related expenses were 31.9% lower at €316.1m, with agents’ commission down 33.9% to €255.9m and other costs reduced by 21.5% to €60.2m.

Payroll costs were down 4.5% to €78.6m and marketing expenses 10.0% lower at €54.6m, but other operating expenses edged up 6.8% to €134.2m.

This left €260.3m in earnings before interest, tax, deprecation and amortisation (EBITDA), down 36.9% on the previous year. OPAP benefitted from €142.7m in gain from remeasurement of a previously held equity interest, which meant operating profit reached €250.4m, down 12.2% year-on-year.

After accounting for finance costs, profit before tax was €216.9m, a fall of 19.4% on the previous year, while after paying €17.6m in tax, profit stood at €199.4m, only 1.3% lower than in 2019.

“Looking forward and having successfully preserved our solid financial position and cash reserves, we continue – despite the still prevailing exceptional conditions – to build on what we have already accomplished,” OPAP chief executive Jan Karas said.

“With confidence, we are pursuing the successful execution of OPAP’s new business strategy, the Fast Forward strategy, in order to deliver even better gaming entertainment to our customers.”

OPAP also published its results for the fourth quarter, during which revenue was 48.3% lower at €230.9m, primarily due to the impact of lockdowns in Greece.

However, OPAP also reported a significant fall in certain expenses, with gaming-related revenue costs more than halving to €59.4m and payroll spend down 6.4% to €18.9m.

EBITDA for the fourth quarter was 51.0% lower at €52.7m, but net profit was up 113.7%, due to a €142.7m related to gain from re-measurement of the 36.75% stake held in Kaizen Gaming’s Greek and Cypriot operations.

“Although Q4 was yet another quarter disrupted by Covid-19, with retail closure and restrictions imposed for tackling the pandemic, OPAP has once again demonstrated substantial operational and financial readiness to mitigate the impact, through its diversified portfolio,” Karas said.

Under the agreement, the combined business will operate as Paysafe Limited, with its common shares to trade on the New York Stock Exchange under the ticker symbols PSFE and PSFE.WS from today (31 March).

William Foley, the founder and chairman of Foley Trasimene, will now serve as chairman of Paysafe’s newly formed board of directors, while Paysafe’s chief executive Philip McHugh will lead the business and its management team.

Paysafe previously said that the merger, which was first announced in December of last year, would create a combined entity valued at $9.0bn (£6.5bn/€7.7bn).

Existing Paysafe equity holders, including Blackstone, CVC and its management, will remain the largest investors in the business.

The merger had been subject to approval from Foley Trasimene stockholders, the US Securities and Exchange Commission and other closing conditions.

“The closing of this transaction and our listing on the New York Stock Exchange is a huge milestone for Paysafe and getting to this point today is testament to the hard work and dedication of our team around the world,” McHugh said.

“We’re excited to be embarking on the next stage of our growth journey as a public company.”

Foley added: “We are thrilled to complete this business combination with Paysafe and I am personally excited to continue to work with Philip, Blackstone, CVC and the entire board as we continue to execute against our plan for accelerated and profitable growth.

“Paysafe has the right assets, team and strategy in place to capitalise on a tremendous opportunity for long-term value creation in the payments industry, especially in iGaming which is really beginning to open up across the US.”

With the merger completed, Paysafe’s new board of directors will begin their terms. The 11-member board includes  Jim Murren, who was CEO of MGM Resorts International from December 2008 until February 2020, and Hilary Stewart-Jones, a UK lawyer that has assisted gambling companies and associated businesses since 1995 and has worked at law firm Harris Hagan.

William P. Foley, II will serve as the new chairman after his business, Cannae Holdings, invested $500m in the combination. As part of the deal, Cannae received 54,294,395 common shares and 8,134,067 warrants of Paysafe.

“We are thrilled to complete this business combination with Paysafe and I am personally excited to continue to work with Philip, Blackstone, CVC and the entire board as we continue to execute against our plan for accelerated and profitable growth,” Foley said.

Philip McHugh, Matthew Bryant, Walter Macnee, Eli Nagler and Peter Rutland will remain on the board.

Element initially agreed to acquire the assets for a total consideration of $78.3m, which was approved by Allied’s board of directors subject to shareholder and regulatory approval.

In early March, Bally’s went on to submit a proposal to acquire the entire Allied business for $100m in cash, stock, or both, in a deal that would terminate the agreement made with Element.

Terms were then agreed last week on an increased offer from Element, which amended its deal to to pay $90.5m upfront for the WPT business and Allied’s other poker assets.

Read the full story on iGB North America

As the entire land-based sector, including operations run by the tribes, is focusing on recovery, we have launched a Tribal Survey in partnership with Pechanga.net.

This project will help us build a picture of what that recovery is looking like, how tribes are prioritising their activities and what investment opportunities they may consider as part of that process.  

We’re inviting tribal operators, governments and regulators to participate, so click here to complete the Tribal Survey. <link> 

The results will be made available when the Tribal Gaming series launches in mid-April and will be discussed during one of the digital speakeasies on 19 April – register your interest here.

About the ICE 365 Tribal Gaming series

Tribal gaming now constitutes more than 50% of the GGR of the US gambling sector, yet it is still often misunderstood or even ignored by the global stakeholders.  

With sports betting and igaming launching in multiple states, many international businesses are starting to take notice, viewing the Native American operations as a partnership and market access opportunity. 

But tribal gaming is governed by a different set of rules than commercial businesses. Anyone wanting to engage with the tribes needs to get acquainted with the concepts of sovereignty, compacts, state-tribal relations, tribal regulatory structure and tribal community.  

New channels and new verticals now opening up in the US offer opportunities for the tribes to innovate and modernise, while adding to their land-based offering. New channels might offer tribes an opportunity for quicker growth as they exit the global pandemic. However, their core focus remains on ensuring that their land-based operations, a crucial source of revenue and jobs, recover quickly. 

The Tribal Gaming series will include a number of on-demand and live content pieces, which aim to improve understanding of tribal gaming and exchange expertise on expanding into new products and verticals. 

To learn more, you can already register for the live sessions, including:  

Webinars:  

• 13 April at 4 pm GMT / 11 am ET / 8 am PST: Tribal Gaming: Politics in Indian Country, featuring contributors such as James Siva, vice chairman, Morongo Band of Mission Indians; chairperson, California Nations Indian Gaming Association and Victor Rocha, owner, Pechanga.net; president, Victor Strategies.  

Click here to learn more and register.  

• 20 April at 4 pm GMT / 11 am ET / 9 am PST: Hospitality and Amenities in Tribal Casinos –Getting the ROI Back, sponsored by Kambi andfeaturing contributors such as Peter Arceo, casino general manager, San Manuel Casino; Max Meltzer, chief commercial officer, Kambi; Tom Cantone, president of sports & entertainment, Mohegan Gaming Enterprise and Bobby Soper, president and CEO, Sun Gaming and Hospitality.  
  Click here to learn more and register. 

Digital speakeasies:

• 14 April at 4:30 pm GMT / 11:30 am ET / 8:30 am PST Digital speakeasy on Tribes and sports betting – Best practice to maximise the opportunity: An invite-only digital conversation, bringing together carefully selected participants from both the tribes and  commercial gaming organisations to discuss how Native American tribes can maximize the sports betting opportunity for the benefit of their community. 
  Click here to register.

• 19 April at 4:30 pm GMT / 11:30 am ET / 8:30 am PST Digital speakeasy on Post-Covid recovery: Drawing from the Tribal Survey, this invite-only digital conversation will bring together tribal operations and advisers to discuss strategies for post-Covid recovery and growth. 
  Click here to register.

These live sessions will be complemented by on-demand content that will include:  

• Tribal Gaming Report 
• Early Adopters video series with the likes of Jim Ryan, Pala Interactive; Bea Carson, Mississippi Band of Choctaw Indians and Anika Howard, Foxwoods Casino & Resort 

• Keynote-style on-demand videos, such as Evening out at Mohegan Sun, where MGE executives talk about the recovery, sports wagering, international expansion and their partnership with Virgin Hotels in Las Vegas  
• Opinion pieces by Prof. Katherine Spilde, Holly Cook Macarro, Richard Schuetz, Jesses Robles and Valerie Spicer, taking a personal and in-depth look at some of the key trends and developments that are set to shape Indian Country in the near future

Register here to be notified when ICE 365 Tribal Gaming series goes live.

In this video, Repansek offers insights into navigating the country’s legal framework, and how the betting market has evolved as a result of online wagering.

In February 2020, before most people could have anticipated the scale of the impact the novel coronavirus (Covid-19) was to have on the British betting industry, or the wider world, William Hill chief executive Ulrik Bengtsson provided a prediction about how the growing crisis might affect his business.

When asked about the potential cancellation of Euro 2020, Bengtsson said it might “not necessarily [be] terrible for revenues”.

At the time, his forecast – of what seemed to be a worst-case scenario – seemed puzzling. Yet the next 10 months saw much more sport cancelled than anyone could have anticipated in February 2020, and while there was a significant revenue hit, Bengtsson’s early optimism seemed to be vindicated.

It turned out to be a year with no Grand National, no European Football Championship, no Wimbledon, no retail betting – ordinarily a £2.8bn industry – whatsoever for much of the year and much of the remaining sports cramped into an altered calendar.

Yet at William Hill, revenue was down only 16% to £1.32bn. Granted, this would be a major hit under normal circumstances, but against last year’s backdrop it looked fairly resilient given that its 2,300 betting shops make it the largest retail bookmaker in the UK.

Flutter’s Paddy Power Betfair (PPB) and Sky Betting and Gaming (SBG) divisions each saw sports revenue increase, by 5% for PPB despite the retail closures and by 26% for the online-only SBG.

Entain, meanwhile, said revenue from its British betting brands grew by 22% year-on-year, which may have been enough to at least partially offset the 40% decline from its UK retail suite.

Looking at the online market as a whole, gross sports betting yield for the operators who reported data to the Gambling Commission, representing about 80% of the market, for the 10 months from March to December 2020 came to £2.01bn.

The impact of the pandemic certainly wasn’t insignificant, but the industry weathered an apparent worst-case scenario reasonably well.

The challenges to come, however, are still numerous and could potentially have a longer-term impact.

Dark clouds forming?

The industry’s financial recovery came in part thanks to strong margins to finish the year, particularly in both October and December. Meanwhile, the crowded third quarter calendar attracted large numbers of customers.

Those trends were clear exceptions: the calendar has returned to normal and margins will normalise too. But more broadly, there is plenty ahead that will change the landscape of betting in Britain well into the future.

As online betting operators brought in £319.6m in December, the Department for Digital, Culture, Media and Sport (DCMS) launched its long-awaited review of the 2005 Gambling Act.

The announcement followed rising calls from opponents of the British gambling industry, such as the Gambling Related Harm All-Party Parliamentary Group (GRHAPPG), which has argued that British gambling legislation is outdated.

The mounting criticism of the industry that led to the review has coincided with the rise of some online products, including live betting. Will Prochaska, chief executive of gambling-related harm

charity Gambling with Lives, says live betting can pose a greater risk than normal pre-match products because of the speed of play.

“We know that the types of gambling products which create the most harm are those that are immersive and have high speeds of play,” Prochaska says. “In terms of sports betting, these specific products are in-play sports betting: that offers multiple opportunities to bet in a short space of time.

“It’s more immersive, in short it’s more addictive, and it causes more harm.”

Yet while the GRHAPPG called for a ban on online live betting in its 2020 report on the gambling industry, restrictions on live betting did not make the DCMS’s call for evidence. In fact, there was little in the review that applied specifically to betting.

But that doesn’t mean there isn’t a lot at stake for the vertical. Many of the questions under consideration deal with cross-product issues such as VIP schemes, deposit limits and marketing, which could lead to a major hit for betting revenue.

The industry – whether through recognition that change is required or recognition of its inevitability – has shown support for the review.

“We welcome the Government’s Gambling Review, which will examine the financial relationship between sports and betting operators,” Betting and Gaming Council (BGC) chair Brigid Simmonds says.

Threat to sponsorships

The most direct application of the relationship Simmonds references is sponsorship, where the English Football League has warned restrictions could lead to a £40m loss for its member clubs.

With Gambling with Lives’ The Big Step campaign having lobbied to end gambling sponsorship in sport, Prochaska says the saturation of gambling sponsorship and the potential harm that gambling can cause mean it should be brought to an end.

“It just seems wholly unnecessary to see that level of gambling exposure, especially to young people and people who may be in recovery,” he says.

Simmonds, however, argues that the funding sponsorship offers to sports provides a great benefit that must be considered amid any sponsorship ban.

“Sponsorship from betting and gaming operators is worth more than £10m a year to darts and snooker, while English Football League clubs receive around £40m a year from the industry,” she says.

She adds that betting’s support to sport is especially important right now, because of the effects of Covid-19.

“Betting operators have provided an economic lifeline throughout the pandemic to the likes of horseracing – through media rights, sponsorship and levy payments – snooker, darts, boxing, the English Football League and rugby league,” she says.

“Some sports are living on a knife-edge because of the ongoing ban on spectators, so the funding provided by our members is even more important than usual.”

Yet the BGC has shown some flexibility in this area already. When questioned by the House of Lords’ Select Committee on the Social and Economic Impact of the Gambling Industry, Simmonds said the industry would consider a voluntary ban on sponsorship. This could make a sponsorship ban among the most likely consequences of the review.

However, Neil Banbury, UK general manager for Kindred, which sponsors multiple football league clubs, argues that the issues with sponsorship could be solved by requiring operators to prove a sustainable commitment to the British market before agreeing a deal.

“There is certainly a lot of sponsorship, and I understand concerns that there may be too much, but I do not believe that means the solution is to eliminate it completely,” Banbury says. “I believe that the bar can be higher to be eligible to involve your brand as a sponsor.

“And then we do work investing in the club and community, ensuring the partnership doesn’t just benefit the club financially, but we also work with the club.

“If we move to a world where there’s a higher bar to entry and that when you are involved that you use it as a force for good, that would be a great place to be in.”

If that doesn’t happen, however, operators will have to search for new acquisition channels. With broadcast advertising under threat from restrictions as well, affiliates could increase in prominence.

Avoiding the worst?

Beyond marketing and VIP schemes – where the industry has already offered concessions such as limiting the schemes to players over 25 – the sports betting industry will hope to avoid harsher limits.

Still, there are many questions in the review that could lead to very severe consequences.

The call for evidence asks questions on hard stake, deposit and loss limits, meaning that each of these could be applied to British betting following the review.

Though Prochaska says there is a “debate to be had” on stake limits for all verticals including sports betting, Banbury argues that any absolute limits risk creating a great deal of harm.

“When it comes to limits, there’s always questions of what level, how they are brought in and whether they are brought in on a blanket level or for certain customers,” Banbury says.

“Limits can be a blocker for a customer. They can be a blocker in terms of harm, but they can also be a blocker in terms of enjoyment and if a lot is asked of a player to raise those limits, they may try to find other ways around them.

“If the limits are a requirement for all players, then you might find players looking for options outside of the regulated system.”

Arguments against the strictest regulation often involve the unregulated market, with the BGC.among those raising concerns about the looming threat

“The industry’s importance to popular national pastimes such as football, rugby league, horseracing, snooker and darts shows why it’s vital that the Government gets the balance right, and does not drive punters towards the illegal, online black market, who have no interest in supporting sport either at a grassroots or national level,” Simmonds says.

Prochaska, however, believes the industry’s invocation of the black market may not always be an answer to concerns.

“I think the argument that you shouldn’t over-regulate regulated sites because people will move to the black market, it suggests a race to the bottom,” he says, adding that action from the regulator to block unregulated sites was feasible and would be of great benefit.

“The other deep concern to me is that very few people knew about black market operators, and the BGC is almost advertising black market operators by talking about them in this way.”

If the industry avoids the strictest limits, it may have to prove it can regulate itself in a sustainable manner.

“What I see is an awful lot of greenwashing: operators promoting safer gambling programmes that put the onus on individuals to reduce harm, which studies suggest only stigmatises gambling harm,” says Prochaska “I’m not a big fan of the industry’s efforts to self-regulate.”

Banbury acknowledges that there is a poor perception around the industry. However, with the operator making efforts to be transparent about gambling-related harm, he adds that some of these perceptions come from events that are, by industry timescales, quite far in the past.

“I think that it’s important that all parties in this debate make changes based on how things are done now, not just how things were a few years ago,” Banbury says. “It’s crucial we acknowledge that we are in a much better place as an industry in terms of mitigating harm than we were a few years ago.”

Affordability under the spotlight

The first question that will affect the industry, however, comes before the review and it concerns affordability.

In a review on player interaction launched in November 2020, the Gambling Commission made a series of proposals that would change how and when operators should interact with customers who may be at the greatest risk of experiencing harm.

That includes a proposed £100 “soft cap” on deposits, with customers unable to deposit any more than this figure in a month until they pass an affordability check.

“I think affordability checks could be a key tool in limiting harm,” Prochaska says. “We believe that anything more than £100 would not be as effective as a soft cap limit. That figure’s really about the upper limit and there has been research from the Social Market Foundation that suggests that that’s the case.”

However, Banbury says that while he agrees with the principles behind the proposal, the specifics in the Gambling Commission’s review raise some questions.

“Affordability will be a key part moving forward, and it should be,” he says. “It’s a really important lens that all operators should look at to limit harm.

“But to me the proposed soft limit is fairly arbitrary and potentially very damaging towards the goal of zero revenue from harmful gambling. What we have here right now places affordability in our view of the customer, but not as the only view.

“We need solutions that aren’t putting the burden of proof on customers when we just don’t know what happens to the customer if they just don’t provide that proof.”

Mitigating the burden

A fear that a large number of players will stop playing – at least within the licensed regime – after receiving requests for documentation, has become a common theme when operators discuss the proposed checks.

However, Sonny Cott, operations manager for affordability solutions provider beBettor, says these checks may be less intrusive than many assume.

“One misconception is that an affordability check must require a customer to share highly sensitive financial information to an operator even at low levels of spend and disrupt the customer’s play,” he says.

Cott says that the initial affordability checks beBettor conducts are based primarily on open data that is already available. Indeed, he says such automated affordability checks will be the only viable way to bring in such a change, as manually checking documents for every player above the £100 limit would simply be too labour-intensive.

“Initial affordability assessments based on personalised geo-affordability are a non-intrusive way operators can get an initial understanding of an individual’s affordability without requiring sensitive financial information from the customer,” he says. “These checks can be conducted seamlessly in the background without disrupting customer play, at minimal inconvenience to the customer and with no marks left behind on the customer’s records.”

However, its enhanced affordability checks may involve documentary evidence such as payslips, as well as further open source information.

With some players facing secondary checks, it is inevitable that soft caps will mean losing some customers, and smaller bookmakers may struggle to automate at the same scale as market leaders.

And with some bettors likely to stake more on specific sporting events, meaning they bet much more in some months than others, a soft cap might be one change that could have a disproportionate impact on betting if implemented rashly.

Standing alone

However, any changes to sports betting in the coming year are likely to take a back seat to larger changes in the world of online casino.

Casino games, and particularly slots, have been the top priority of many reformers, with concerns that these are these products that lead to a disproportionate level of harm.

A 2018 GambleAware survey found that slots are over-represented among those who spend £500 per month or more, and these games face much more scrutiny than sports betting.

Many changes proposed to limit harm from slots – for example, to game mechanics such as spin speed, or stake limits for slots – will not have a direct impact on sports betting. Indirectly, however, sports betting could be expected to become a larger driver of revenue for many operators if casino becomes less lucrative.

To campaigners such as Prochaska, meanwhile, a clearer separation of betting and casino may be an effective way to limit harm.

“I think operators should be limited in their ability to cross-sell riskier products to those who are betting on sports,” he says. “I think if you’re going to place a bet on football, you shouldn’t be flooded with ads for slots.”

With this not included in the Gambling Act review consultation, it appears unlikely even in the most sweeping reform scenarios.

But if cross-sell becomes less of an option through other means such as stake limits for casino, sports betting may be required to stand much more on its own, rather than as a revenue stream that can double up as a casino acquisition channel. The vertical proved its resilience in the face of adversity last year, now it must try to do the same again.

Racing’s position on the Gambling Act review
Some of the most vocal opposition to the changes proposed has come from the world of racing, as the sport most intertwined with the betting industry.
Betting advertising and sponsorship is an especially large source of revenue in racing, so much so that in the House of Lords report on the British gambling industry, it recommended a ban on sponsorship in all areas except horse and greyhound racing, where the impact on the sports and to on-course bookmakers was deemed too severe.
But with the horserace levy paid by bookmakers and based on betting revenue being a key component of the sport’s funding, anything that has an impact on betting risks affecting the sport.
The British Horseracing Authority has said that the sport could lose as much as £60m due to affordability checks alone. Needless to say, harder limits could have a larger impact on the sport.
All of this comes at a difficult time for racing. Like many other sports, Covid-19 slashed attendances, and therefore revenue.
Charlie Liverton, chief executive of the Racehorse Owners Association (ROA), says the impact of strict new regulations on the back of the pandemic’s impact could lead to severe consequences.
“The effect of Covid-19 continues to impact British racing, both on and off the racecourse,” Liverton says. “The potential ramifications of government reviews, including the Gambling Act and the affordability review, are concerning.”
But unlike many other sports, racing was in a decline even before Covid, with both betting revenues and attendances falling.
British off-course gross gaming yield on horse racing was £5.74bn in the year to March 2009, but by the year to March 2019, that total had fallen to £4.19bn, while in the partially Covid-hit year to March 2020, GGY was just £3.95bn.
On-course betting revenue, meanwhile, fell from £377.2m in 2009-10 to £251.4m in 2018-19, before a sharper drop in 2019-20 because of the impact of the pandemic in March.
Those in racing will hope the effects of the review will not be too severe, but the sport may need something else to fully revitalise it.

Australian rules football club Sydney Swans and A-League football team Macarthur FC have both signed up to the scheme, through which they have agreed to not accept any gambling-related sponsorships.

The teams have also committed to educating their staff, players and supporters about the risks associated with gambling.

The New South Wales Office of Responsible Gambling signed a similar agreement with Cricket NSW in October last year. The authority is now in talks with other codes and clubs, with the aim of announcing more sign-ups later this year.

“We now have four major agreements across three of the most popular codes after starting with cricket; that really speaks to clubs recognising their role in looking after their fans and their communities,” director of the Office of Responsible Gambling Natalie Wright said.

“Sport is a big part of our Australian culture, and it should be enjoyed without having to experience gambling advertising as part of a match.”

Sydney Swans chief executive Tom Harley added: “The focus of our partnership is on addressing the normalisation of sports betting and as part of this, Swans matches at the SCG will not feature gambling advertising or sponsorship

Tom Harley, Chief Executive Officer of the Sydney Swans said the club was thrilled to be working in partnership with the NSW Government’s Reclaim the Game initiative to raise awareness of the risks associated with gambling.

Macarthur FC chairman Gino Marra also said: “As a club, we want to ensure we are looking after the wellbeing of our members, fans, and the wider community. This partnership does just that.”

The new checks will help the Ladbrokes and PartyGaming operator identify customers at risk of running into financial difficulty as a result of their gambling, and implement staking limits and tighter affordability checks. 

“We have been working on player affordability concepts for the past 18 months as part of our ARC affordability programme,” Entain group operations director Peter Marcus explained. “This aims to identify relevant limits at the right time to protect customers whom our technology has identified as being vulnerable, or particularly at risk.”

Entain has rolled out the functionality across its 14 brands active in the British market, and claims to be the first major operator to deploy technology-led player protection solutions, affordability checks and individualised stake limits. It expects this rollout to be completed by the summer. 

The ARC affordability framework uses open source and commercially available data on customers, combined with behavioural indicators. Entain data scientists have built models to demonstrate varying levels of potential financial risk, to help flag potential harm.

Affordability checks have emerged as a contentious issue in the industry, with the Gambling Commission launching a consultation in November last year to develop blanket thresholds to apply across all British licensees. 

They are supported by campaigners for regulatory reform, including the Social Markets Foundation, which has advocated for a £100 ‘soft cap’ for player spending. Any deposits above this figure would then trigger enhanced affordability checks on customers. 

However, many in the industry have attacked these proposals, claiming that it would make regulated sites less attractive to players, and even infringe on individuals’ right to privacy. Others have claimed that a blanket framework for all players would negatively impact on sustainable gamblers, while doing little to actually prevent problem gambling. 

Entain, however, aims to avoid this by setting limits based on available data, which can then be raised if the individual shares additional information about their affordability. 

“This means the vast majority of customers who show no indications of financial risk can still bet with us freely,” Marcus explained. “We think this is an important step in preserving personal freedoms, and will also greatly benefit the horse-racing industry, which is concerned about the impact of blanket measures on its future viability.”

Entain chief executive Jette Nygaard-Andersen added this personalised approach to affordability checks would offer the highest level of protection to the operator’s most vulnerable customers. 

“We are deeply committed to giving every customer the best experiences and protection we can, tailored to their particular needs.”

Launched in November 2020 alongside the business rebranding from GVC Holdings to Entain, ARC aims to ensure all the operator’s players have appropriate safeguards allowing them to gamble sustainably. 

By February this year ARC had expanded its range of behaviour indicators of harm to include factors such as fluctuations in stake levels, erratic play and evidence of chasing losses. Its data scientists had also begun to model situations to help safer gambling teams spot potential problems and intermittent signs of harm. 

Further models and behavioural indicators are in development, such as variable stake limits based on risk level, with tests having shown that interactions with targeted customers has led to players reducing their staking and depositing limits by around 55%. 

ARC will be fully live in Britain from this summer, with work underway to customise the solutions for different markets and cultural norms later in 2021.