Road to ICE 2024: The year’s biggest igaming developments

The road to ICE is a special series rounding up the biggest developments since ICE London 2023, starting with the Gambling Act white paper and a new German gambling regulator taking charge.

GB Gambling Act white paper heralds slot stake limits

The UK government’s white paper setting out reforms to the 2005 Gambling Act was a milestone moment for the industry when it appeared in April this year.

After multiple delays, three prime ministers, five culture secretaries and six gambling ministers, the final document landed with something of a whimper. The industry had long priced in many of the measures expected to be included and it brought few shocks.

But what did this blueprint to replace “analogue legislation for the digital age” have in store for igaming? 

In the short term, not very much. The government is working through the white paper’s measures through a series of consultations, but this is where things could get knotty.

Gambling Act review could bring slot stake limits in GB

Among the measures that will be explored are stake limits for online slots, with a consultation launching in July this year. It sets out a range of options, from £2 per spin to £15 per spin.

The government explained it is pursuing a blanket limit, rather than a tiered or “smart” limit based on player activity, as this will be quicker to implement. However it goes deeper, with specific limits for 18- to 24-year-olds as the government sees this demographic as especially vulnerable. 

For these players, there are three options on the table. First there’s the prospect of a £2 to £4 limit, or for additional due diligence on the cohort, but no special limit. Data collated over the past two decades by Public Health England found problem gambling prevalence of 8.7% within online slots, casino and bingo games and a 44.2% prevalence of at-risk gamblers within those products.

The risk from slots – and the risk from offshore

Why pick out online slots in particular? That’s down to stats from the National Gambling Treatment Service (NGTS), which show the percentage of slot players seeking treatment jumping from 16.5% in 2015-16 to 38.1% in 2021-22. So, what sort of impact can the industry expect?

Government estimates put the total reduction in gross gaming yield anywhere between £16.1m for a £15 limit and no additional controls for under-25s, to a £413.5m hit for a blanket £2 limit. This will also add significant costs to operators’ bottom lines, of between £5m to £10m per company. 

Considering the vast number of slots on the market, with thousands available through each operator, it changes the game significantly. In Germany, a market where a €1 per spin stake limit is enforced, operators tend to offer much fewer titles.

While this rationalises the offering for players, German licensees pay a hefty price – Rootz, for example, estimates revenue is tracking around 20% of pre-regulation levels. At a time when black market risks are talked down in Great Britain, could this lead to a rude awakening?

ICE VOX brings you a special session digging into a post-white paper Great Britain on 6 February.

German operators count the cost of strict regulation

Yes, 2023 marked the first year German gambling regulator Gemeinsame Glücksspielbehörde der Länder took full control of Germany’s regulated sports betting and igaming market, only to find itself grappling with a host of issues. 

Slots and online poker stakes are taxed at 5.3%, while slots are subject to a €1 per spin stake limit. It took until March for cracks to appear. The Deutscher Sportwettenverband warned of a boom in black market activity, pointing out players could access 840 illegal sites and open an account with 723 of 1,500 assessed in a February study. 

How big?

This meant when then-GGL president Ronald Benter claimed the regulator was “well on the way to creating an attractive legal market”, few believed it.

This descended into a war of words between the German gambling regulator and the DSWV, especially when the authority argued 95% of handle was staked via legal sites. The total was based on estimates of the German black market’s size, estimated at between €300m and €500m. Industry stakeholders suggest it could be far larger. 

The scale of the issue was laid bare by Rootz CEO Sam Brown, at Behörden Spiegel’s Bundeskonferenz zum Glücksspielwesen in October. 

Brown told delegates Rootz’s player deposits averaged €350 prior to the toleration period in the run-up to the State Treaty’s terms being implemented, with gross revenue per player standing at around €141. By August 2023, average deposits fell 80% to €150, while GGR halved to €73.

“And they haven’t stopped gambling and found another hobby,” he added. 

Is harmful gambling on the rise in Germany?

It comes as warnings over harmful gambling are on the rise. For example, the Federal Drug Commissioner suggested four out of ten slot players are at risk of gambling-related harm. Whether these players are gambling via regulated sites, or shifting to unlicensed offerings, was left unclear. 

Further evidence of the black market’s rise was laid bare in a University of Leipzig study, commissioned by the Deutscher Online Casinoverband. This discovered the channelisation rate of players towards the regulated online space was 50.7% in March 2023. For black market sites, 28.9% of traffic was to unlicensed EU providers and 19.9% was to unlicensed offshore providers.

In short, Germany’s new era is off to a tricky start – there’s demand from players for igaming, but there are enough obstacles to mean the offshore brands are the ones to profit. 

ICE London takes place over 6-8 February 2024, with ICE VOX running from 6-8 February. Register now to confirm your place!