Is the UK sports betting industry salvageable? Bleak 2024 outlook raises concerns
The UK has arguably been one of the world's most prominent sports betting markets for a long time, with horse racing, dog racing and football being highly attractive to punters. However, change is afoot in the industry, showing signs of decline. Leading figures in the sports betting space have expressed serious concerns about the future of this industry. For instance, David Brown, the former trading director for William Hill and Ladbrokes Coral, recently said that he has never, during his career spanning almost 50 years, been more concerned about the health of the UK sports betting market.
2023 proved to be quite the tumultuous year for the UK sports betting sector, with 2024 looking far from any better. Despite GGR figures shooting up by nearly 10%, the lion's share of this success can only be attributed to online casino activity. While the reason for this is still being evaluated, it might possibly be because 'win real money' no deposit bonuses may sound more enticing than sportsbook bonuses, promos and bonus codes despite the great deals available at BonusMonitor.com.
A sign of things to come?
2023 financial reports triggered this downward spiral within the sports betting market. 2023 was expected to be a remarkably successful year for the sports betting industry, thanks to the 2022 World Cup being followed by a bustling season of horse racing. Sadly, however, this was not to be the case.
Bet365, dominating the UK's online market share, sounded the initial alarm. Their trading update in early 2023 revealed a staggering 88% decline in operating profit compared to the previous fiscal year. A second red flag emerged from 888/William Hill. Upon releasing their Christmas and World Cup earnings in early 2023, they meticulously avoided comparisons with their gross win performance during Russia 2018.
Entain, once hailed as a beacon of promise in the industry, witnessed a deteriorating outlook throughout 2023, with their growth decelerated with each quarterly earnings report. In November, Goldman Sachs dealt another blow, downgrading Entain from a "buy" to a "sell". Amid mounting concerns over business expansion, they projected negative pro-forma online growth for Entain in Q4 of 2023 and H1 of 2024.
Regulatory hurdles: The impact of the White Paper
The UK government published a key white paper in April 2023, which is said to be the most transformative review of UK gambling in the past 18 years, and it presented the bigger issues facing the sports betting sector. A notable feature of this white paper is that it introduced affordability checks slated for 2024. These checks in their present format have faced criticism for their intrusive nature, and it is believed that such measures risk pushing customers towards the black market. The industry and the UK Gambling Commission are at odds over the implementation and accuracy of these measures.
One example of a sticking point is that the UK Gambling Commission has claimed that only 3% of accounts will be subject to affordability checks, and there has been some debate over the accuracy of this figure. Essentially, the issue here is that many of the accounts undergoing the affordability checks will belong to 'occasional' gamblers, such as those that only bet on significant events such as the Grand National and aren't likely to bet more than a few times a year. It is likely that intrusive measures, such as those described in the government white paper, are likely to deter 'occasional' gamblers from using regulated online bookmakers.
Rise of the black market: Challenges and consequences
Along with this trend comes the looming threat of the black market, which is on the rise with the proliferation of rogue casino operators who are increasingly preying on vulnerable players in the UK, as per recent data released by Yield Sec.
Under the leadership of CEO Ismail Vali, the intelligence platform has unveiled startling statistics: the number of illicit operators in the UK surged fourfold between 2021 and 2022. This figure doubled once more to reach 231 in 2023. Notably, over 1,000 affiliates contributed to the promotion of these illegal platforms.
Yield Sec's report indicates that illegal gambling now commands 4% of the UK's online gambling market share and gross gaming revenue (GGR). This alarming development substantially reduces tax revenue and funding for essential responsible gambling initiatives like GAMSTOP.
Yield Sec's findings highlighted a disturbing reality in terms of online behaviour, namely millions of Google searches aimed at circumventing self-exclusion measures. This poses a grave risk to problem gamblers, who may resort to unmonitored and potentially harmful platforms to satisfy their addiction.
This situation creates a dangerous scenario where at-risk players are lured into the clutches of illegal and potentially harmful gambling platforms, which operate beyond the oversight of tools like Yield Sec and GAMSTOP. This analysis further exposes a vast and largely unchecked landscape where illegal operators exploit vulnerable audiences as a central aspect of their marketing strategy.
At the core of this troubling trend are two key metrics: Cost per Acquisition (CPA) and Revenue per Player (RPP). Illegal operators focus on acquiring customers from demographics often overlooked by legal entities, thereby reducing their operational expenses.
Navigating growth: Future opportunities in retail and online sectors
It isn't all doom and gloom, though. Historically, the UK has proven itself to be highly resilient when facing uncertainties. Therefore, there is some hope that the sports betting industry can bounce back from recent setbacks.
One such example of this is seen in the case of Playtech Sports, spearheading the revival of UK retail through Self Service Betting Terminals (SSBTs), offering convenience and speed comparable to online platforms. With a focus on customer experience and innovation, retail betting is witnessing a resurgence, attracting both existing and new punters.
As exemplified in Star Sports's case, having a positive outlook and investing in brand loyalty initiatives will also be necessary for operators looking to thrive in this competitive landscape. By expanding its retail presence and investing in online platforms, Star Sports aims to maintain its market share and foster customer loyalty through increasingly personalized service and community engagement. Where other entities have seen a crisis, Star Sports has found an opportunity and their aggressive approach to being present in the retail sphere is comendable.
Bridging the gap: Collaboration for industry resilience
Key industry figures such as David Brown have advocated for collaboration between industry leaders and regulatory bodies to address the growing divide. With decades of experience, Brown emphasizes the sports betting industry's resilience but calls for proactive steps to navigate regulatory challenges and ensure a sustainable future for UK sports betting.
Echoing sentiments of resilience, Flynn Goward, head of operations at Star Sports, underscores the need for clear regulatory guidance to safeguard players and industry stakeholders. As the industry awaits decisive action from the UK Gambling Commission, stakeholders must work together to mitigate risks and foster responsible gambling practices.
In summary, the UK sports betting market certainly looks to face significant challenges in 2024, from declining earnings and regulatory uncertainty to the proliferation of black market operations. However, opportunities for growth do exist in the retail and online sectors, provided industry leaders can prioritize innovation and collaboration in navigating the evolving landscape.
DISCLAIMER: This is paid for advertorial and is not the view of Lancaster Post. If you suffer from a gambling problem or suspect somebody you know does, then we strongly suggest that you call the National Gambling Helpline at 0808-8020-133 to talk with an advisor for help and to make gambling safer for you or your loved ones. Remember all gambling sites and guides are 18+ only.
Visit these free gambling addiction resources: