U.K. gaming industry hoping for a more collaborative future in 2023

2022 has created multiple financial and human challenges for all industries, especially the gaming sector where there were often talented IT and R&D teams in countries now badly affected by the war, writes Hilary Stewart-Jones, chair and CEO of Skywind Group.?

Interest rates, fuel prices, political and economic uncertainty have made running businesses much tougher and board decisions harder than ever.?

What is good news is that we seem to have finally navigated Covid lock downs (for the majority of countries, anyhow) which not only will boost retail, but businesses more holistically where meetings and conferences can at last take place in person. However, some of the occurrences/trends of 2022 will continue to throw a negative shadow well into 2023.

The long-awaited overhaul to the gambling legislation in Great Britain has still not been implemented and we are left with much uncertainty and endless speculation. It may be fine for the regulator (the Gambling Commission) to assert that prescriptive legislation is undesirable, by reference to a statute we have worked with since 2007, as it rules out flexibility. However, in practice, it is only once in a blue moon that the “flexibility” of the 2005 Act is interpreted to the benefit of licensees.

Hopes for greater cooperation

In the meantime, the Commission continues to be in a combative mode vis-a-vis the gaming industry; there has been a whopping ￡45 million in fines imposed on 16 licensees thus far this year.?

The good news is that Andrew Rhodes, the current Commission CEO, said in his address this year that he wanted to be more collaborative with the industry. The bad news is that he believes that it should not matter to the Commission how big or small the industry is. (“It is not …its [the Commission’s] role to grow or contract an industry”.)

This however flies in the face of the Statement of Principles for Licensing and Regulation to which the Commission must adhere. Principle 2.11 requires the Commission to have regard. “… to the desirability of economic growth….”. (Indeed, this was a principle so important to the Maltese government that it is enshrined in the gambling legislation itself – see the Gambling Act 2018 – section 4(e)).

Whilst some reported revenue losses by gaming licensees may be in part the collateral damage caused by the necessary heightened affordability and SR checks, the reported loss of British VIP players who can justify/sustain larger losses may also be down to the level of detail and intrusiveness of the information sought, and legitimate concerns about data breaches. Little wonder they are seeking solace in the unregulated markets.

Disproportionate fines

However, what is also concerning is that the fines are frequently disproportionate to the alleged harm. Who can forget the experience of one gaming operator last year which had its fine almost doubled for having the temerity to appeal the original fine imposed? (Sadly, it lost its appeal from the tribunal finding at court in December). The day-to-day compliance costs are totally out of kilter with the margins that can be generated from the market. In short, there seems to be no real attempt by the Commission to understand the economic pressures on licensees (despite it being a self-stated obligation to have regard to economic growth) and the fines are used as tools to punish, not rectify and “make good”. Hopefully, the promised increased collaboration may stem the trend and keep a competitive number of operators in the British market.

• With thanks to David Whyte, Harris Hagan