Shares Fall as MPs Demand Online Stake Limits

Shares in UK betting firms have fallen by almost £1.2 billion following recommendations made by a cross-party group of MPs. The Gambling Related Harm All-Party Parliamentary Group wants to introduce a series of measures to improve consumer protections, such as a maximum stake limit on online slot games.

A colorful reel of a slot machine.

A cross-party group of MPs want to place caps on online casino stakes, similar to limits placed on Fixed Odds Betting Terminals. ©Krissia Cruz/Unsplash

What Does the Report Say?

On Monday the 4th of November, the Gambling Related Harm All-Party Parliamentary Group, or for short the GRH APPG, released their interim report on the online gambling sector. The report outlines a number of key measures that these MPs want to put into place to combat gambling harms, following a six-month inquiry. The report highlights the issue of problem gambling in those who play slots and casino games online.

The group consists of MPs from across the political spectrum, including former Conservative party leader Iain Duncan Smith. If these recommendations go ahead, it could cost the industry £2 billion a year. According to statistics collected by the industry regulator, the Gambling Commission, this could hit more than a third of the industry’s income.

Carolyn Harris, Labour MP for Swansea East and APPG chair has described the online gambling industry as an ”unregulated wild west”. She criticizes both the Gambling Commission and the Government for being inactive and ineffective when it comes to tackling problem gambling. Speaking about the report, she highlighted the importance of research, education and treatment in combatting gambling harms.

“This report highlights the urgent need for a root and branch review of the regulation of online gambling. Stakes and prize limits online would be a major step forward in reducing the harm caused by the sector. It is not at all clear why the Gambling Commission is not looking at this as a matter of urgency. It is an abdication of its responsibility as a regulator.”Carolyn Harris MP, Chair, GRH APPG

In one of its most drastic and controversial recommendations, the report makes a clear-cut case for capping stakes on online slot machines. These would be brought into line with the £2 stake limit placed on Fixed Odds Betting Terminals in January 2019.

“We do not see the justification for having slot machine-style games online with staking levels above £2. If they are not acceptable in land-based venues they should not be allowed online.”

Other proposed measures include more responsible advertising and restrictions on VIP accounts. A ban on the use of credit cards in online gambling is also mentioned so that gamblers cannot fund their addiction using debt. The report also suggests that gambling addiction should be treatable by the NHS. The group of MPs wants the government to create new legislation with a focus on harm prevention.

The report is particularly critical of the industry regulator, the Gambling Commission. It says that GambleAware or the Gambling Commission should no longer commission research. Instead research should be transferred to independent research councils in a public health setting.

“Gambling addiction is becoming a public health crisis. It is clear from this inquiry that the powers of the Gambling Commission need to be significantly strengthened. For too long, online gambling operators have exploited vulnerable gamblers to little or no retribution from the regulator.”Rt Hon Iain Duncan Smith, Vice-Chair, GRH APPG

In response, the Gambling Commission said that it was ”disappointed” that it was not given the opportunity to provide the APPG with evidence before the report was published.

How Has This Affected the Market?

The report has triggered a shockwave, as investors have withdrawn their shares from UK gambling firms. Some of the recommendations seem to have come as a surprise, which explains the sudden downturn. One industry analyst claimed that ”investors weren’t expecting this”. Shares in William Hill are down by 12.5%, while GVC, the group behind Ladbrokes and Coral, saw their shares fall by 10.5%. Shares in 888 Holdings fell by 13.9%.

“The main thing which certainly surprised me was the maximum stakes online, the fact they put a number on it.”

Those working in the industry have voiced their skepticism of the recommendations. The changes defined in the report are radical and could have a negative impact on the industry. The report wants to bring online stakes in line with FOBT stakes. However, the online market is where operators have sought to offset their losses following FOBT stakes being capped at £2. New regulations would leave few options for operators to generate income elsewhere, and would likely result in losses. After the government crackdown on FOBTs, William Hill said it would have to close 700 of its UK betting shops. GVC also said that it would likely close 900 of its shops.

Online gambling operators have also expressed concerns that new regulations such as those in the report would not have the effect that MPs want. According to a spokesman for William Hill ”A flat £2 stake is likely to push players into unregulated sites. There’s massive potential for unforeseen consequences.”.

“Over-regulation would be highly counterproductive and do far more harm than good. Such measures could lead to an increase in problem gambling, as customers move away from responsible, regulated operators towards the black market”Kenny Alexander, Chief Executive, GVC

When Will These Changes Happen?

At the moment, the recommendations set out in the APPG’s report remain just that – recommendations. They are yet to be debated, and until that happens, legislation won’t be passed. The government has listened to the APPG before, on the matter of Fixes Odds Betting Terminals, so this group of MPs does carry some weight. However, the online gambling industry is worth a lot to the UK and there will be an industry backlash to any tough new rules.

The report recommends a complete overhaul of the UK’s gambling legislation, which is no mean feat. Problem gambling has become a hot topic in the media over the last couple of years, and the government is well aware of this. Both the Lib Dems and Labour have called for a rethink on responsible gambling. Prime Minister Boris Johnson is reportedly ‘sympathetic’, but with a general election scheduled for the 12th December, this report could well end up on the backburner.

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