Year in Review Part One: Gambling Act review commences and firms count the costs of 2020
As 2021 began, the UK betting sector was fixated with the onset of the review of the 2005 Gambling Act review, the outcomes of which would become clearer as the year progressed.
The overhaul of the UK’s regulatory gambling regime did not just catch the eye of industry leaders, however, as Chancellor of the Exchequer Rishi Sunak voiced his concerns regarding the implementation of ‘enhanced affordability checks’.
Sunak expressed his views to the DCMS after racing delegates in his Richmond North Yorkshire constituency and other racing leaders estimated that a ‘blanket measure’ such as a £100 spend-limit threshold for affordability checks could result in a loss to horse racing to the tune of £60 million.
Meanwhile, the public, reform advocates and gambling incumbents were given a further indication of what to expect from the review when it was reported in late January that Prime Minister Boris Johnson and his cabinet would support a ban on sponsorship arrangements between sports clubs and betting companies.
The development was described as ‘common-sense’ by Carolyn Harris, Chair of the All-Party Group on Gambling Related Harm (GRH APPG) and campaigners alleged that such a ban would have the support of two-thirds of the general public.
However, later on during the first quarter of the year the DCMS’ eye would widen to encompass not just the gambling industry but also the regulatory authority as well, as the UK Gambling Commission (UKGC) came under scrutiny following the collapse of Football Index.
The football player exchange platform was forced to cease operations and its parent company BetIndex entered administration after thousands of players left due to a decision to slash dividends from 13p to 8p.
Although suspending the firm’s licence, the UKGC was criticised for acting too late and of failing to heed prior warnings about Football Index’s business model, prompting an official government investigation into the situation.
Despite encountering this hurdle later in the quarter, the UKGC was able to provide insights across a range of areas concerning the British betting and gaming sector, with the organisations’ Executive Director of Research and Statistics, Tim Miller, making two key announcements.
In the first, Miller presented the findings of the first ‘National Strategic Assessment’ which evaluates the Commission’s response to risks and duties – promoting a Single Customer Viewpoint (SCV) – and one month later detailing what the review of the Gambling Act would focus on.
Commenting on affordability checks, he said: “We are not talking about grey areas here. We are talking about clearly unaffordable levels of gambling. It perhaps will come as no surprise that our business plan features work that addresses the risk of harm from gambling.
“Indeed the last couple of years have seen the debate around gambling regulation rightly dominated by such issues. We make no apologies for focussing the industry’s attention on this.”
On the commercial side of business news, the industry continued to evaluate the costs of the COVID-19 pandemic, with the retail sector predictably receiving a substantial hit. William Hill in particular highlighted a £30 million loss for its retail divisions from the year prior, although still experiencing a 9% increase in revenue during the fourth quarter of the year.
Lastly, kickstarting a rollercoaster year of M&A developments, MGM Resorts International confirmed that it would not pursue its prospective buyout of Entain, whilst maintaining that it remains ‘committed to working with Entain’ in order to guarantee the momentum of the two company’s joint venture BetMGM.
The US betting and casino conglomerate had seen its previous offer of 0.6 MGM shares for each Entain share – representing a value of 1,383 pence per share and a premium of 22% to the company’s share price – rejected by the FTSE100 gambling group.