Overall Market Declines, Yet UK Online Gaming Yield Rising

As the overall gaming market declines, the online sector continues to grow.

Recent figures by the Gambling Commission showed a downturn in retail gaming and an overall market decline in the gaming sector. Despite this, online gaming continues to buck the trend, showing continual and steady growth. It's a pattern that could reflect the average consumer's preference for the online landscape, as well as certain political and economical trends. Let's explore the figures.

Retail Gaming Market Declines

On the whole, the market hasn't moved too much, but what is interesting is that most of the decline in revenue comes from the land-based market. The overall figures from the Gambling Commission for October 2017 to September 2018 show a 0.4% decrease in Gross Gambling Yield (GGY), down to £14.5 billion for land-based and online gaming combined.

When the retail statistics are examined, it's clear to see which industries are suffering the most. According to the report, the number of betting shops are down 1.5% to 8,423. William Hill and Ladbrokes have both announced that they intend to close down up to 1,000 shops in 2019 and onwards.

Meanwhile, the number of bingo premises in the UK is down 1.1% to 650, while the number of licensed arcades is down 5.3% to 1,639. Retail gaming businesses are shutting down, and this is shown in the reduction of GGY.

One new casino has opened, taking the total to 152. There has also been an increase in the number of gaming machines, up 2.4% to 183,813. However, the number of B2 (FOBT) machines has decreased 1.6% to 33,360.

Retail Revenues

Despite a reduction to the overall number of betting shops, non-remote betting is still the main contributor to the land-based gaming economy, with a GGY of £3.2 billion, down from £3.1 billion in the last period of April 2017 – March 2018.

Land-based casinos take second place, with GGY of £1.08 billion, down from £1.18 billion. Bingo contributes £682.8 million, down from £677.8 million GGY, while arcades have dropped from £427.5 million to £421.6 million.

The lottery represents a category of its own. UK National Lottery GGY saw a very slight dip from £3.008 billion to £2.998 billion, yet donations to good causes rose 0.3% to £1.5 billion. Other UK lotteries saw a rise from £507.3 million to £517.8 million GGY, while contributions were up 5.1% to £314 million, an industry record.

When we compare these numbers to the online gaming industry, it's easy to see that the retail world is dropping off, while online is growing fast and catching up in terms of revenues and GGY. 

Online Gaming Yield Rising

The online gaming sector seems to be heading in the opposite direction. The GGY between October 2017 and September 2018 was £5.6 billion, up from £5.5 billion. This is an increase of 2.9% following on from the previous period.

The market share of online gaming also grew by a total of 1.2% to 38.8%, representing a significant growth that could see the online industry overtake the retail sector in years to come. The iGaming industry itself is booming, and as of 2018 was worth an estimated 52 billion.

In terms of Gross Gambling Yield, the online casino sector scored highest, with £3 billion GGY. The growing popularity of online slots boosted this total, with slots accounting for £2 billion of the total online casino GGY. It's common for major online casinos like PokerStars to offer hundreds of slots games, some with progressive jackpots that run into the millions.

Remote betting is also a major sector, with a GGY of £2.5 billion. This is dominated by football betting, followed by horse racing.

New UKGC Rules To Strengthen Age and Identity Verification

As of May 2019, new UK Gambling Commission rules have been implemented, with the aim of increasing safety and fairness for players.

The rules demand stricter and more prompt ID and age verification. The new rules ensure sites verify players' identities before deposits are made, and before any bets are made, including free or bonus bets. Even free-to-play versions of games will require verification.

It is not yet clear what impact this will have on the growth of the online gaming sector. On the one hand, stringent sign-up processes may deter some players. However, if the policy works, then the quality and security of trusted sites should improve, fostering a safer culture and encouraging more players.