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2019 so far - Part One
Half the year has now passed, with the year dominated by advertising crackdowns, new regulatory restrictions and signs that long-awaited market openings may finally be moving into view. iGaming Business looks at the biggest stories from the first six months of 2019, and examines their impact on the igaming industry.
The five stories covered in this piece, to be followed by a further five tomorrow, comprise the most read news stories on iGamingBusiness.com for the year to date, and they effectively tell the story of the year so far.
Throughout 2018 there were plenty of signs that the igaming industry was facing a tough 2019. European jurisdictions tightened their controls, with Italy passing a blanket ban on gambling advertising, the UK slashing maximum B2 machine stakes to £2. Furthermore, few expected the post-PASPA roll-out of sports betting across the US to avoid push-back from well-funded anti-gambling activists.
This - and more - came to pass. iGaming Business’ top ten news stories for the first six months of the year tell the story of 2019 to date. From the year’s key developments it appears that the only thing certain is uncertainty.
Despite some positive developments, it appears the sector finds itself on increasingly shaky ground. Advertising is a bone of contention across a number of European markets, with regulators and governments quick to move against those they feel are promoting their services in an over the top way. It feels as if bad behaviour is quickly punished, to the point that some regulators - namely Italy - are taking a ‘shoot first, ask questions later’ approach to enforcement.
10. Betway sets sponsorship record with West Ham renewal
This may seem a fairly standard seasonal story. From May onwards, as the European football season comes to an end, operators announce new sponsorship agreements with clubs. Betway’s partnership with West Ham United has been one of the most successful and enduring sponsorship deals, dating back to 2015, so it’s hardly a big surprise that the relationship will continue.
However, this sort of partnership may have a limited shelf life. Pressure groups that were previously focused on slashing fixed-odds betting terminal (FOBT) stakes in the UK have quickly set their sights on gambling advertising. The sector has already shown that it is prepared to cede ground, through last year’s moratorium on advertising around live sports broadcasts. However GVC Holdings has gone a step further, calling for a total TV ad ban, and the end to sponsorship agreements. It has even donated its Betdaq brand’s shirt sponsorship deal with Sunderland AFC to the charity Children with Cancer UK.
As the UK’s largest operator, GVC has the revenue and stability to make such gestures. Furthermore, a ban would ultimately benefit GVC by preserving its market-leading position, with challenger brands unable to carve out market share by investing heavily in advertising to build brand awareness and a customer base. In addition, industy opponents could see the move as grounds to push for further concessions. Should that happen, partnerships such as Betway and West Ham’s may soon become a thing of the past.
9. Casumo faces €310k Dutch fine
Casumo’s fine was one of many to be issued by Dutch regulator Kansspelautoriteit (KSA) this year. It has even upped minimum fines to €200,000 as it looks to discourage operators from targeting players in the Netherlands. The previous minimum sum, of €150,000, was not “terrifying” enough, the KSA said.
This occurred against the backdrop of the stalled progress of the country’s Remote Gaming Act. The bill was introduced in 2014, then passed by the House of Representatives in 2016, before progressing to the upper chamber of the Dutch legislature, the Senate. It remained there until February this year, leaving operators in limbo.
However, a push by Minister for Legal Protection Sander Dekker saw the bill finally passed by the Senate. The KSA now expects the act to come into force from July 1, 2020, with the licensing process to begin shortly after, with a view to opening the market from January 1, 2021. Operators are already being asked to register their interest in applying for a licence, and 79 have suggested they will apply.
Uncertainty remains, namely over the status of operators that have been fined for activities in the market. Some Senators pushed for a five-year ban on such companies, though a two-year prohibition was ultimately passed. The regulator is due to open a consultation on this policy this year, and technical regulations are being drafted by the Ministry of Security and Justice.
While those that have been hit with fines face a worrying wait to find out when they will actually be allowed into the market, progress, especially after a long and frustrating wait, is certainly welcome.
8. Swedish regulator fires self-exclusion scheme warning
This warning, issued little more than a week after the Swedish igaming market opened, set the tone for Sweden’s approach to regulation. Shortly after, the country’s gambling regulator Spelinspektionen said it would no longer issue warnings regarding non-compliance, instead moving ahead with enforcement action. It was not joking - Global Gaming's SafeEnt subsidiary has already had its licence revoked for failing to comply with social responsiblity and anti-money laundering regulations.
Fines for failures, such as integrating with the country’s self-exclusion database swiftly followed. Bonus, restrictions, which allow operators to grant players a single financial incentive upon sign-up are carefully enforced. Perhaps most worrying, however, is the debate over advertising.
Spelinspektion feels a number of operators are guilty of “excessive” advertising. What this actually entails remains hard to pin down, though it has clearly rattled licensees. Former gambling monopoly Svenska Spel has already cancelled all online casino advertising for the rest of the year, while the SkillOnNet-powered PlayOJO has pledged that its ads will not appear between 4pm and 9pm. This is to ensure they are not seen by minors.
However such efforts may fail to head off a blanket ban on advertising. The Gaming Market Commission (Spelmarknadsutredningen) has been asked to explore new ad restrictions, including a total ban, and will deliver a report on the matter by October 2020.
It’s not as if operators are cleaning up. The former state monopolies Svenska Spel and AB Trav Och Galopp account for around half of market turnover, with everything else shared between around 60 other operators. The long-awaited opening of the Swedish market is turning into a much bigger task for licensees than previously envisaged.
7. Norway tightens up rules to ban unlicensed games
One of the developments that has passed many by is Norway’s increasingly aggressive efforts to crack down on offshore operators. The Norwegian government, and Gaming Authority (Lottstift) has made it clear that it will no longer tolerate unlicensed activity, and is stepping up enforcement action.
This will focus on hitting operators in the bank accounts, with Lottstift granted the power to have banks reject payments to accounts owned by igaming operators. This measure has in theory been in place since 2011, though a lack of action until now suggests that the actual obligations on the banks had been unclear.
Specific blocking orders for Firstclear Limited, a subsidiary of Kindred Group, Lucky Dino Gaming and Dreambox Games were issued in February this year, following similar bans targeting four operators including Betsson and Cherry’s Co-Gaming in November 2018. Kindred in particular is being pursued for activities in Norway, to the point that it has filed a lawsuit against Lottstift, arguing that its efforts to penalise the business go beyond its regulatory remit.
A consultation on whether to close a loophole that has seen offshore operators advertise via satellite channels to bypass a blanket prohibition on advertising is also underway. This would effectively take almost all gambling advertising off Norwegian TV screens, as Norsk Tipping does not promote its casino offering through the medium.
Norway’s efforts could embolden other jurisdictions such as Finland to strengthen its enforcement efforts. And against a backdrop of increasingly anti-gambling sentiment, it may prompt officials in soon-to-regulate markets to pursue stricter controls against operators. While its efforts may not have attracted much attention, Norway’s actions could have far-reaching effects.
6. Italy begins 2019 with gambling tax hike
While Italy’s blanket ban on gambling advertising, effective January 1, meant that licensees were already aware they faced a tough 2019, the introduction of new, higher taxes showed that the country’s government was not done with its anti-gambling crusade.
Taxes for online casino and bingo operators rose 5% to 25% of gross revenue, with sports betting’s rate increased to 24%. Land-based wagering tax was upped to 20%, and virtual sports are now subject to a 22% tax, up from 18% of GGR. Amusement with prizes (AWP) machines and video lottery terminals (VLTs) were also hit. The AWP tax rate has to 18.85%, while VLTs will be taxed on 6.75% of revenue.
These measures appear to have been rushed through, shown by the fact that it took until April 2019 for Italy’s advertising and communications regulator Autorità per le Garanzie nelle Comunicazioni (AGCOM) to set out the scope of the ad ban. This offered some hope for operators, as information on gambling will be allowed to be shared, effectively putting content-driven affiliates in a strong position.
It may be derided as an ill-conceived, populist measure, but Italy’s ban on gambling advertising proved to be just the first in a long line of new controls. Belgium, which has long appeared uneasy with igaming, has banned operators from advertising on TV, effective June 1. Issues in the UK and Sweden have been documented earlier in this piece. Denmark, long considered one of Europe’s most liberal igaming markets, is now introducing new advertising controls. Spain aims to impose the restrictive controls in place for tobacco ads on gambling. Operators are facing upheaval in how and where they can advertise. Italy, it transpires, was not an outlier, and instead a sign of things to come.