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UK online gambling revenue across reporting operators fell by 17.6 percent in the year to June 2022, with the rollout of tighter affordability measures ahead of the UK government’s Gambling Act review having significantly depleted rates of spend per active player.
The UK Gambling Commission reported in its latest update on gambling business data last week that gross gambling yield (GGY) across reporting online operators fell by 21.7 percent year-on-year to £1.24bn in the second quarter of 2022 and 17.6 percent to £5.04bn across the year ending June 2022.
The industry data, which has been tracked since the start of the COVID-19 pandemic, is based on submissions from the UK’s largest licensed operators, covering approximately 80 percent of the online market by revenue.
The figures include the vast majority of the UK online betting market, but a smaller share of the more fragmented online gaming category.
Based on the regulator’s monthly updates and market-wide quarterly statistics up to March 2021, VIXIO GamblingCompliance estimates that total UK online GGY, calculated after the deduction of player bonuses, declined by 14.6 percent to £6.11bn over the year to June 2022.
UK online betting GGY over this period is estimated to have nosedived by 31 percent from just under £3bn to little more than £2bn, with steep year-on-year declines of 42 percent in the fourth quarter of 2021, 38 percent in the first quarter of 2022 and 36 percent in the second quarter of 2022 reflecting margin headwinds, as well as shortfalls in amounts wagered.
VIXIO GamblingCompliance estimates that UK online gaming GGY, excluding slot games, fell by 17.6 percent to just over £1bn on the same basis, with revenue from the increasingly dominant slots category, while bucking the broader trend in edging up by 3.1 percent to an estimated £3.06bn in the year to June, falling into a mid-single-digit decline in the first half of 2022.
The extent of the UK market’s recent downturn, the steepest on record, partially reflects a tough prior-year comparative of £7.15bn.
Online activity during the 12 months ending June 2021 was inflated by a uniquely congested sporting calendar and substitution of retail gambling during the country’s second and third national lockdowns between October 2020 and February 2021.
Operator commentary in the year-to-date has nevertheless made it clear that the moderation in UK market size back towards pre-pandemic levels has been driven in large part by a significant, self-imposed tightening of player affordability measures across the industry in preparation for the country’s new Gambling Act.
The Gambling Commission provoked fears of “seismic change” when issuing a consultation on remote customer interaction towards the end of 2020 in which £100 was mentioned as a “lowest possible threshold” of average monthly losses to potentially trigger affordability checks.
A recent draft of the UK government’s long-awaited Gambling Act white paper was reported by the Earnings+More newsletter last month to include provisions for “passive” affordability checks for customers losing £125 within one month or £500 within a year.
Online behemoth Flutter Entertainment, whose stable of UK-facing brands together commanded a 28.6 percent share of the overall UK online market in 2021, cited a £30m headwind from safer gambling measures when reporting a 26 percent decline in pro forma UK and Ireland online revenue in the first quarter of 2022.
32Red owner Kindred Group reported that double-digit contractions in UK revenue in each of the first two quarters of this year reflected the impact of stricter affordability checks from the second half of 2021, which dictate that new customers are “assessed for financial vulnerability and limits placed accordingly”.
Multi-brand operator Entain, whose UK online market share is estimated to have edged up to 15.6 percent in 2021, chimed with its rivals in citing tighter affordability measures and tough prior year comparatives as contributing factors to a 15 percent decline in UK online revenue in the first half of 2022.
On top of these factors, the Ladbrokes Coral owner’s July trading update attributed a fall in levels of spend per active user in the second quarter to “weakening consumer sentiment” caused by spiralling rates of inflation both in its largest market and internationally.
Active player figures included in the Gambling Commission’s gambling business data updates are consistent with the portrayal of a market which is declining despite robust levels of participation.
Average monthly active online bettors across reporting operators grew by 6.5 percent to 5.31m in the year to June 2022, albeit with average monthly betting GGY per active account nosediving by 35 percent to £31.80 over the same period.
Active accounts within the mammoth online slots category meanwhile increased by 15.9 percent to a monthly average of 3.35m over the same period, offset by a 12.2 percent decline in average monthly slots spend per active account to £55.70.
Entain deputy chief executive Rob Wood told analysts last month that although spend per head has begun to decline across all segments of the group's player base, the revenue contribution from its top cohort of spenders in the UK has fallen by just over half since the start of 2021.
Wood stated: “It's a combination of moderating spend plus losing customers who inevitably some don't want to go through the kind of (affordability) processes that are in place.”
Entain will report its full interim results on Thursday (August 11), to be followed by Flutter Entertainment’s half-year results announcement on Friday (August 12).
