UKGC Reminds Brands Leaving UK Of Expectations Following Recent Exodus
Over the last 18 months the UK has seen several gambling brands leave the market. This is for various reasons ranging from challenges to do with Brexit, new higher taxation rates and tighter regulations to do with fixed odds betting terminals, advertising, age verification, and social responsibilities. The UKGC and ASA have also upped the rate and size of fines of late for social failings (e.g. Ladbrokes) and use of materials that appeal to children.
On the back to two recent rapid exits by the ComeOn group and EveryMatrix the UK gambling commission has therefore released a statement reminding license holders of their responsibilities and expectations on them if they do decide to close down or leave. We discuss these expectations below.
The UK is the most heavily regulated gambling market in the world, but it is also one of the biggest by being open and fair, placing safety and corporate responsibility at its core. The market is however the most competitive in the world too and this is has resulted in some smaller brands deciding they do not want to spend the money and effort to meet guidelines when they cannot guarantee profits.
This also comes at at times when the biggest betting companies are merging, such as the recent announcement of Flutter Entertainment (owner of Betfair and Paddy Power) acquisition of the Stars Group (owner of Sky Bet, among others). These multi-billion companies can afford to spend more to cover increasing operating costs in the UK, further crowding out smaller brands.
What Are The UKGC Expectations?
The UKGC accepts companies close down, become insolvent or simply just pull-out of the UK for many reasons, but it has become concerned by the speed at which companies are leaving and the poor communication with customers on the affect this will have on them.
A recent example this year was the sudden closure of Irish bookmaker BetBright that left customers in limbo about what would happen to their funds and bets. Luckily in this case the 888 group bought the BetBright platform and following pressure decided to honour some ante-post wagers; although this was a wake up call and warning for the gambling commission that more needs to be done to help punters.
They want companies to be more sensible in assessing their liabilities to make sure they don’t overstretch themselves. They also want companies to be more transparent in what will happen to advance bets and potential winnings if they do close.
While customer funds must be held in separate accounts there are actually three levels of protection the UKGC stipulates:
- Basic – Separate accounts for customer funds, but still part of the operators business.
- Medium – Insurance or other protection of customer funds if they go bust.
- High – Funds held in an independent account protecting customer funds in case of insolvency
The fact is that most companies only offer basic protection, even most of the bigger bookies. This means if the company goes bust you have no guarantee of getting your money back. The gambling commission wants operators to give more information about this to customers in advance of any planned closures to ensure customers can retrieve their funds in advance.
If a brand does decide to close they are expected to give clearer information than at present on what will happen to user accounts and bets, showing they are in control of the process and giving appropriate information on how account holders can seek redress. This includes making efforts to disseminate information through multiple channels, such as social media, providing clear dates when bets will not be accepted from and a firm closure date.
It is also expected that companies will have robust policies on how they will settle ante-post bets in the event they go bust and how they will return money to users.
Why Are Brands Leaving The UK?
The UK recently increased its remote point of consumption tax to 21%, coming into force in October 2019. The 6% increase is putting pressure on companies who already struggle within the UK market, especially as they now need to spend more on verification systems and responsible gambling.
Unfortunately many companies are using this as an excuse to leave a competitive market. In many places abroad tax is much lower, or there is no tax at all, and while these markets are less safe for the user they are more profitable for betting companies, so many are deciding to only operate in lower tax markets.
Gone are the days when you could slap up a gambling advert anywhere at anytime with any imagery. The ASA have become more vigilant in recent years following pressure to curb underage and problem gambling.This has led to more restrictions, for example on the usage of people or celebrities under the age of 25 in gambling adverts and the use of any imagery that may appeal to children. There are also now restrictions on having demo-games and how children can access areas of operator sites.
The effect of this is companies are now finding it harder to advertise, which further increases costs and plays into the hands of the bigger companies with bigger budgets.
Corporate and Social Responsibilities
New verification laws now mean betting brands must pre-vet all customers before they can deposit and bet. This is designed to prevent under age and problem gamblers being able to gamble at all, the old rules simply prevented people withdrawing funds before verification.While this is obviously safer for the users it means smaller brands again have to wear the higher costs associated with this combined with the reduction in successful sign ups as many users fail to go on to complete verification.
This is only part of a wider social responsibility drive that requires operators to offer more tools and advice for customers to prevent addiction. Many companies do not want to do this just for the UK, especially if most of their business is based outside the county, and so they leave.
Struggle To Compete With Betting Giants
The size of groups such as the new Flutter-Stars group, William Hill, Ladbrokes-Coral (part of GVC), Bet365 and 888 Holdings mean that they are out-competing smaller brands.It is important for a free and open market to have choice and the danger is that as smaller or less UK-focused brands leave the market that this could result in a less competitive sector. This could lead to collusion, as as been seen previously in things like energy markets, that would ultimately lead to a worse betting environment for users.
Regulators face a difficult balance between providing a fair and safe market but while leaving it open and affordable for brands.
Mainly Non-UK Facing Brands
The past decade has seen a lot of European brands enter the UK market, these companies were set up in other countries and then later acquired a UK gambling license.In the early days brands did not have to make many changes to operate in the UK but that has changed a lot in recent years and, therefore, companies where the UK only makes up a small proportion of their market share are beginning to leave. They see it that they can’t justify implementing the changes required for what is to them a more minor market.
License Suspension / Revocation
When EveryMatrix decided to leave the UK in September 2019 they did so on the back of the UKGC suspending their license for responsible gambling failings.The company, that offers white-label services for a range of brands, decided it would be easier for them to leave than to rectify the issues and reinstate their license.
This is a natural issue that comes with the power of the gambling commission to issue fines and revoke licenses, companies that do not want to comply will simply leave.
Bookies Going Bust
The fact is that to get anywhere in the UK betting landscape you have to spend money. This includes spending on advertising, affiliate marketing and sponsorship.The high entry costs to get a brand going can often leave companies struggling down the line and this has caused many companies to go bust.
A brand in trouble at the time of writing is MoPlay who decided to spend big when they set-up by sponsoring Manchester United and Watford. Cash-flow troubles have now resulted in both Man United and Watford taking the brand to court for owed sponsorship money. The company have also repeatedly failed to pay affiliate partners.
This should flag up concerns for customers with the solvency of the brand looking ever more shaky a closure could be on the horizon. The brand also only have basic protection for customer funds.
What Are The Dangers For Customers?
Unfortunately like most things in life you only consider protections in place when something bad happens. The UKGC are however strongly suggesting customers read the key business terms when they sign up to an operator so they know what level of protection they have in place.The UKGC cannot stop a company from leaving the UK or going bust so it is very much on the customer to ensure they know what the risks are. This is perhaps a little unfair in that these terms are often buried in the T&C’s on sites. We have complied a list of protections offered on our sister betting guide site that could help you decide on safer brands.
It is recommended and good practice to never keep significant funds in a betting account and withdraw excess money when you can to prevent the risks of losing your cash should an operator go bust.
Once a bookie decides to close the UKGC expects them to clearly explain what will happen to ante-post bets. If a company is simply leaving the market and remains solvent in most cases you won’t be able to place new bets but they will allow ante-post bets to settle and pay winnings when they do.There is no obligation to do this however, and when a company goes bust the best you can hope for is to get your stakes back. In the case of BetBright I touched on earlier it was on the fact that 888 bought the brand and decided to honour some ante-post bets that meant customers did not lose out. This will not happen every time.
If you like to place bets long in advance you should think about who you want to place these bets with and whether they are guaranteed to be around when those wagers complete.
Loss Of Good Brands
We bet with brands for a variety of reasons and while there may still be a lot of choice in the gambling sector online the loss of brands we like is still frustrating for customers.
When ComeOn left in September 2019 it removed one of the best loyalty bookmakers for existing customers from the UK. ComeOn were one of the most popular sites around with a fantastic points scheme that rewarded users proportionally based on how they bet. They also had a focus on openness and fairness that punters seemed to love.
Many people are upset at losing this brand as there is no simple alternative to go to. This may be a fact of life, similar to when your favourite high street shop goes out of business, but it is still frustrating for customers.