The UK’s online gambling market dominates the European market, accounting for over 30% of total online gaming revenue. What impact will upcoming regulations have on its success?
From April 2020 to March 2021, the UK’s online gambling market saw a gross gambling yield of £6.9 billion – an increase of 18.4% from the previous year, a figure that grows by year. Of this, online casinos made up the vast majority, generating £4.0bn in GGY. This is followed by sports betting and bingo, according to the Gambling Commission.
Since becoming fully regulated following the enactment of the Gambling Act 2005, online gambling has steadily grown in the UK, with sports betting, online casinos, and bingo each being widely available. As of 2021, it’s reported that there are over 2,439 gambling operators in the UK market, the vast majority of which offer iGaming services.
Like all other regulated markets, the UK experiences its share of friction between operators and regulators. Online Gambling regulations in the UK have been present for quite some time and are somewhat of a double-edged sword for operators – some regulations provide benefits, but others limit operator freedoms.
For example, strict anti-underaged gambling and security regulations mean operators have to invest in strong processes. However, this benefits them in the longer term, as these processes aid in deterring underaged gambling and fraud. In parallel, there are also some regulations that don’t favor operators, such as a range of limits on advertising. This is the give and take inside a highly-regulated environment.
The UK Gambling White paper — A balancing act.
In April 2023, three years after prime minister-at-the-time, Boris Johnson launched a review of the UK’s gambling landscape, a UK gambling white paper was released. The paper sets out a series of changes to the Gambling Act 2005, which featured rules for the industry before the proliferation of smartphones and online gambling.
The UK government has pledged to work with the Gambling Commission to implement changes as soon as possible. Consultations and trials for some of the changes will be carried out, but all measures are expected to be in force by summer 2024.
Read more about the UKGC’s plans for the UK’s gambling sector in our blog, ‘From paper to policy: What’s next for the UK’s gambling sector?’.
Why online gambling needs to be regulated in the UK.
Regulation is crucial for the online gambling market in the UK. It’s beneficial to both operators and players, with the core focus of regulations being the safety of all parties. This is done through regulations that promote important points such as fraud prevention, anti-underaged gambling processes, and money muling.
With online gambling being easily accessible, each of these things – and more – are vital. The ease for underaged users to claim to be adults is quite high, so it is clear as to why we witnessed the introduction of regulations bringing in ID verification and other anti-underaged gambling tools. In the same light, using Online Gambling to ‘clean’ money is a common criminal practice, so this is why many regulations focus on anti-money laundering processes.
It’s also important to consider how sports events impact online gambling and why regulation is vital in this segment. Euro 2020 saw a huge increase in player verification, with millions of pounds being waged throughout the tournament. It’s easy for fraudsters to attempt to slip through the cracks in such a busy period, where operators may be overwhelmed with player signups.
Online gambling regulations and laws in the United Kingdom.
The Gambling Commission is the key regulator of gambling in the United Kingdom, both traditional brick and mortar and online. It was created when the Gambling Act 2005 became law, and updated gambling laws and regulations to keep up with technology, particularly Online Gambling.
There are many different laws and regulations covering gambling in the UK. They include focus points such as fraud prevention, anti-underage gambling, know your customer requirements, anti-money laundering checks, operator advertisement limitations, and much more. Key regulations are outlined on the Gambling Commission’s website, as well as the Gambling Act 2005.
Some of the most noticeable regulations include an increased barrier to entry for potential customers due to customer identity verification requirements. They ensure that a thorough onboarding process checks customer identities before allowing them to gamble, which includes age verification checks, verification of names, addresses, and date of birth during the onboarding process.
The identity verification requirements come as both positive and negative for players and operators. On one hand, both are more protected, with underaged or at-risk users having a more difficult time being able to gamble. However, these requirements also lengthen the onboarding process, which is negative for both parties. Players may get bored while waiting, they may be missing required documents, or struggle with the process, thus potentially turning them away from the gambling website and a loss of customers for the operator.
Furthermore, with these customer identity verification requirements in place, higher operating costs are expected. Players will no doubt flock to websites that can verify their information the quickest, meaning speed will be key to attracting new customers.
With every customer having to be verified upon signup before they can place a deposit, it will be in every operator’s best interest to make the process as quick and painless as possible.
Whether this means hiring staff to manually validate data or investing in a verification platform, costs will rise.
The UK Gambling Commission’s added rules as of September 2022
Changes have been implemented to the UK gambling market, with the Gambling Commission outlining new rules that went into effect on 12 September 2022.
These rules aim to protect at-risk customers and require operators to:
- Monitor a specific range of risk indicators, as a minimum, that identifies gambling harm
- Flag risk indicators and place a requirement to take action in a timely manner
- Implement automated processes for strong indicators of harm
- Prevent marketing and the take-up of new bonuses for at-risk customers
- Evaluate interactions and ensure the operator interacts with consumers at least at the level of problem gambling for the relevant activity
- Provide evidence of customer interaction for high risk to the Gambling Commission
- Comply with these requirements at all times, this includes ensuring the compliance of third-party providers
These changes only affect at-risk customers, so it is unlikely they will have a significant impact on the UK’s Online Gambling market. Operators will have to limit marketing and bonuses for at-risk customers, but the majority of changes will be on a technical side that won’t impact most players. All the details can be found on the official Gambling Commission update.
Playing by the online gambling rules and laws.
Of course, the most important part of this is being compliant with the rules and regulations, which are required to receive a license. There are many regulations and relevant information is provided when applying for a license, however, one of the most important things are no doubt the KYC requirements.
The requirements include verification of a customer’s name, address, and date of birth, which are generally verified through the submission of an official government document (such as a passport or driving license) and proof of address (such as a bank statement or utility bill). These documents must be verified during the onboarding process or before a customer is allowed to deposit funds and start gambling.
Verification methods such as these can cause issues for customers, as mentioned previously, and its possible users will not want to wait to be verified or simply struggle with the process. This risk of operators losing potential customers is a concern, but solid industry figures such as IDnow go through remarkable efforts to address such matters.
Our automated identity verification solution for the gambling market can easily address the customer experience and be quite secure. It is a solution to ID verification issues, allowing users to quickly and easily complete the onboarding process. This would both greatly reduce the barrier to entry, as well as overall costs.
From the user’s perspective, it only requires a mobile phone or computer with a camera and a few minutes of the user’s time. Our automated KYC solutions provide a simple step-by-step guide to users, aiding them in providing the correct documents, then automatically verifying the data in just a few minutes. There would also be no need to use staff to manually check documents, as the AI-Powered ID verification tool would do just that, and IDnow specialists are always available for a manual review in the unlikely case it is needed.
Our automated IDV solutions have a proven track record of success, provides conversion rates of up to 90%, and is not only compliant with the DACH market (Read more: Online Gambling regulation in DACH – an overview), but supports rapid scalability with compliance in 195 countries while supporting over 30 languages. If you want to enhance your onboarding process and reach compliance in a range of markets, AutoIdent will get you there in no time.
If you would like more information on how to obtain a UK gambling license, read our ‘Everything you need to know to get a UK gambling license.’ blog.
Senior Head of Regulatory Affairs at IDnow
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