Flutter, the parent company of Paddy Power and Sky Bet, has announced that it may lose up to £100 million annually due to the UK government’s proposed gambling reforms. The government’s white paper suggested several measures, including a stake cap for online slot machines, and Flutter estimates that implementing these changes could cost them between £50 million and £100 million.
In this article, we will examine the implications of these gambling reforms on Flutter’s business and the wider gambling industry.
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What Are the Proposed Reforms?
The UK government’s white paper, entitled “Review of the Gambling Act 2005,” was released in December 2020. It proposed several measures to address problem gambling, including:
- A £2 to £15 stake cap for online slot machines
- Stricter affordability checks for gamblers
- A mandatory levy on gambling companies to fund research and treatment of problem gambling
- Greater powers for the Gambling Commission to fine companies that breach regulations
Flutter’s Response to the Reforms
Flutter stated that it had already taken steps similar to those proposed in the white paper, such as implementing a £10 cap on stakes for online slot machines and performing checks on high-spending customers. These measures cost Flutter around £150 million annually.
However, Flutter estimates that the additional measures proposed in the white paper will cost them between £50 million and £100 million, bringing the total impact to between £200 million and £250 million.
Despite this, Flutter’s CEO, Peter Jackson, stated that the company would work with the government to shape the final version of the reforms.
“We will constructively engage with the Government and Gambling Commission as part of the subsequent industry consultation process, with a focus on providing support to the minority at risk of gambling harm without interfering disproportionately with the enjoyment of the vast majority,” he said.
Flutter also called for the regulator to address the issue of unlicensed and unregulated gambling companies that target at-risk gamblers.
What Are the Implications for the Industry?
The gambling industry has been under increasing scrutiny in recent years due to concerns about problem gambling. The UK government’s proposed reforms are part of a wider push to address these concerns and protect vulnerable gamblers.
However, the reforms are likely to have a significant impact on the industry, particularly on companies that rely heavily on online slot machines. According to the UK Gambling Commission, online slots account for around 70% of online casino revenue.
The proposed stake cap on online slot machines could also lead to a decline in revenue for the industry, as players may be less likely to play if they cannot bet high amounts.
Conclusion
Flutter, the parent company of Paddy Power and Sky Bet, has warned that it may lose up to £100 million annually as a result of the UK government’s proposed gambling reforms. The reforms, which include a stake cap for online slot machines, are part of a wider push to address concerns about problem gambling.
While the reforms are designed to protect vulnerable gamblers, they are likely to have a significant impact on the gambling industry, particularly on companies that rely heavily on online slot machines. Flutter has called for the regulator to address the issue of unlicensed and unregulated gambling companies that target at-risk gamblers.
It remains to be seen how the reforms will be implemented and what their impact will be on the industry. However, it is clear that the gambling industry is facing significant changes in the coming years as the government seeks to address the issue of problem gambling.
COMMENTS
Addressing the unlicensed and unregulated gambling companies that target at-risk gamblers must be a priority! Otherwise all their other measures won’t do much and the bad apples will grow in size and numbers. This is where most of the focus of the government should go.
The government must closely work together with these gambling companies to find ways to not destroy this industry altogether. The government’s intentions might be good but if they are poorly implemented we will see a swift rise of unlicensed sites where people will go. So the problem can become 100x times worse if they aren’t careful.
It would be better to test these measures on just a few companies, for 1 or 2 years and see what happens. Doing this for all the industry will surely lead to problems.
Problem gambling won’t be solved with such measures. The government needs to work with other institutions as with skilled psychiatrists who know how gamblers think. If they don’t go to the root of the problem and try to find the people that are most at risk and help them all the way, from start to finish so they escape this addiction, well, then nothing will change.