Is there a reversal of fortune between online and High Street ahead?

Proposals for mandatory affordability checks and maximum stake limits for online operators may well end up levelling the playing field for retail premises, says OLBG CEO Richard Moffat.

in depth richard moffat 2

When the results of OLBG’s first UK Gambling Habits Survey came in earlier this year, they were not particularly surprising in terms of gamblers’ use of High Street bookmakers.

The survey of 1,007 bettors, carried out by YouGov, painted a clear picture of a market that had moved away from betting on the High Street and towards playing online.

Almost a quarter (23.5%) of those polled said they had used High Street bookmakers in the past but didn’t anymore, while a further 18.7% said they had exclusively used High Street operators in the past, but that more of their betting now takes place online. Just 7.5% of respondents said most of their gambling was still at High Street outlets.

After several years of major operators reporting declines in their High Street businesses, and the pandemic having dramatically exacerbated the move towards online, one might reasonably expect the situation to be worse by the time we repeat what will be an annual survey early next year.

But a number of recent developments suggest the reverse might prove true.

888’s full-year results for 2022, for example, revealed a lagging online business but a resurgent retail arm. Released in April, the operator’s pro forma results showed a 15% fall in online operations but a more than 50% rise in retail revenues.

Of course, it must be noted here that some of this was due to the impact of last year being compared against 2021 when Covid-related restrictions were still affecting retail.

However, it was largely ‘additional player safety measures’ that 888 blamed for the online drop, while it also listed the potential introduction of affordability measures and maximum stakes on online slot machines in the UK – both of which were proposed in the recently released White Paper – as principal risks to its business.

"65% of bettors surveyed said they were not willing to comply with affordability checks"

This was in line with the view given by Entain at the release of its full-year 2022 results in March.

It reported a 2% fall in online revenue and a 66% rise in retail revenue, blaming the former largely on ‘regulatory changes in major markets’. More specifically, it said affordability checks had ‘created a headwind of approximately 10% on UK online revenues in 2022.’

Indeed, our UK Gambling Habits Survey showed such checks – which many operators, including Entain, have already started carrying out in anticipation of these becoming a formal requirement – are not popular with bettors. Overall, 65% of bettors surveyed said they were not willing to comply with affordability checks.

A common sentiment among those surveyed was that they’d rather move to another operator than provide documents such as bank statements and payslips to prove they could afford their gambling.

It’s worth noting that the White Paper published last month has not proposed gambling operators ask for bank statements and payslips at the lowest level of what the government is calling ‘financial risk checks.’ Rather, it stated that background checks for things such as CCJs should be run and that these should be unintrusive and frictionless.

But even if this is the intention, some people simply won’t want to consent to the credit reference or open banking data checks mentioned in the White Paper. Many won’t want credit checks carried out on them for gambling purposes, even if they are told these searches shouldn’t be visible to other parties, and surveys have repeatedly found that many Brits aren’t comfortable with open banking.

Few would argue against the higher-level checks outlined in the paper, aimed at higher and potentially riskier ‘binge’ levels of spending, with thresholds of losses of £1,000 ($1,232) in 24 hours or £2,000 within 90 days.

However, for the lower-level checks, aimed at ‘moderate levels of spend’ and proposed for net losses of £125 per month or £500 per year, the disparity between the two thresholds could play a role in driving punters back to retail outlets given the government is proposing financial risk checks only for online operators.

A net loss of £125 per month equals £1,500 per year, while a net loss of £500 could impact someone spending just £41.66 per month gambling.

"Online is also set to lose the advantage it had over retail when it comes to slots"

For regular gamblers spending £50 or so per month, it may well be preferable to hit a High Street bookmaker than gamble online if they feel their privacy is being impinged by affordability checks.

Reports from this year’s Cheltenham and Grand National events suggested that on-course bookmakers believed they were taking more bets due to punters wanting to avoid online operators’ affordability checks. Indeed, the horseracing sector has been particularly vocal about its opposition to affordability checks.

We commissioned a separate survey on people’s betting intentions for this year’s Grand National, which was also carried out by YouGov.

While it found that most of those planning to bet on the Grand National were going to do so online, differences in people’s normal betting methods were noted.

While 63% of those planning a bet said they mostly bet online, only 53% were planning to bet on the Grand National online. Some 7% said they usually bet in person at the track, but 11% were planning to do so this year, while 12% said they usually bet at a High Street bookmaker, but 18% were planning to do so for this year’s race.

It’s entirely possible it was affordability checks driving these changes to people’s usual gambling method.

And it’s not just affordability checks that could see a resurgence in the popularity of High Street bookies going forward.

Online is also set to lose the advantage it had over retail when it comes to slots. While the £2 limit was brought in on FOBTs back in 2019, this now looks set to be introduced to the online environment. As yet, it’s unclear where the level will sit between the £2 and £15 mentioned in the White Paper, but in any case, a significant levelling of the playing field looks set to take place.

Given the stated aim of the gambling White Paper was to make it fit for the digital age, it is little surprise that many of the measures outlined focused on remote operators. What might perhaps not have been fully anticipated was the fact that these measures could have the effect of driving players back to retail outlets. Here it can be harder to monitor behaviour and it might therefore be more difficult to meet the UK Government’s overall goal of protecting players from gambling-related harm.

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