Are we heeding the warnings from Europe?
The online slots industry is dynamic and ever-evolving. Players, operators and regulators seem to be in an almost ongoing state of flux. Thus, I find recent developments in Germany, Belgium and the Netherlands intriguing.
According to various reports, somewhere between 50% and 90% of players in these countries are using unlicensed casinos since the introduction of low stake limits in the regulated sector. This trend has raised concerns about player safety and lost tax revenues – both issues prompting regulators to take action.
In this article, I’ll explore the situation in more detail and discuss what we, in the UK, can learn from their experiences.
What's happening in the Netherlands?
Gambling regulations in the Netherlands were recently revised to include stricter rules for online gambling. These regulations include a limit on the amount that can be bet per hour and per day – known as 'stake limits'.
Stake limits are meant to prevent players from overspending and/or developing gambling addictions. These limits have proven controversial among some players and gambling companies, but the Dutch government believes they are necessary to ensure responsible gambling practices.
Online slots ban...!?
And then on 16 April 2024, a big one: the Netherlands’ House of Representatives went one very large step further, voting to ban 'high risk' online gambling games such as slots. It will be interesting, to say the least, to see how this one unfolds.
Stake limits and potential impact
Stake limits are designed to prevent excessive gambling and protect vulnerable players from potential harms.
In the UK, debate has long raged about the effectiveness of stake limits in curbing problem gambling. In response to concerns about the impact of high-stakes gambling, the government introduced a £2 maximum stake on fixed-odds betting terminals (FOBTs) in 2019 – a move widely welcomed by campaigners and health professionals.
A £2 stake limit for online slots will come into place in September 2024 for those aged under 25, with over 25s limited to a maximum £5 per stake.
However, the situation in the Netherlands and Germany shows that stake limits can have unintended consequences. In the Netherlands the government introduced a €500 weekly stake limit in 2019. The aim was to curb problem gambling and protect players, but it had the opposite effect.
Many players turned to unlicensed casinos to get around the limits, exposing themselves to more significant risks. This inevitably led to an increase in unregulated gambling activity, making it harder for the government to monitor and regulate the industry.
The rise of unlicensed casinos
Unlicensed casinos, also known as rogue or illegal casinos, are online gambling sites that operate without the required licences from the relevant authorities. These types of casinos are a significant concern for regulators, as they pose a risk to the safety and security of players. They also represent lost revenue for governments.
One of the main reasons why unlicensed casinos are so popular is that they are subject to different regulations than licensed casinos. Players may well be able to wager more per spin, shaking off the shackles of the regulated sector, but it also means less protection. Players may not be adequately safeguarded against fraud or unfair play and may not receive their winnings if the casino goes bust. This lack of security can result in players losing money and having no legal recourse to recover it.
In the Netherlands, unlicensed casinos have become increasingly popular due to stake limits imposed by the government on the regulated sector. These limits have resulted in many players seeking them out online, where they can find higher stakes or bonuses. However, these sites are not regulated by the Dutch government, so players are taking a significant risk using them.
The situation in Germany and Belgium
The situation in Germany and Belgium is similar to that of the Netherlands. In Germany, the government introduced a new State Treaty on Gambling in 2020, which aimed to legalise online gambling and boost revenue for the state. However, the treaty also includes strict stake limits, causing concern among industry experts.
However, on the other hand, in Belgium, the situation is different again. The government introduced a strict licensing regime for online casinos, which led to a reduction in the number of unlicensed sites operating.
And then in July 2023 Belgium introduced a near-total ban on gambling advertising. The decision to impose the ban was criticised, as the Belgian gambling trade body Bago pointed out that the government went against the advice of the country's Gambling Commission by implementing the ban.
Industry experts are concerned that stake limits, among other measures, effectively act as a driver for players to use unlicensed sites. The stakes are higher, impacting win potential and the whole experience is more exciting to some. This, of course, undermines the government's efforts to regulate the industry effectively.
It's clear that finding a balance between protecting players and allowing the industry to thrive is a difficult task.
Lessons for the UK
So, amid the mayhem of new regulations and the consequent move by many players to unlicensed sites in Europe, what can we learn? What does this tell the Gambling Commission (UKGC) about how they should approach regulatory changes in the UK?
Firstly, strict stake limits can have unintended consequences. While undoubtedly well-intentioned, they can drive players towards unlicensed casinos and expose them to significant risks.
Secondly, we can see that unlicensed casinos are a significant concern for regulators. The UK already has a thriving licensed casino industry, but unlicensed casinos may still be tempting for players who want to play for higher stakes. Regulators must crack down on unlicensed sites to protect players and ensure the industry is fair and transparent. The UKGC has already taken steps to address this issue, launching a crackdown on unlicensed operators in 2020.
Finally, it is essential to recognise that the gambling industry constantly evolves, and regulators must be prepared to adapt.
Conclusion
The situation in Holland and Germany shows that strict stake limits can actually have a negative impact. While the intention is to protect players, increased regulations can actually drive them towards unlicensed casinos and expose them to greater risks. It is important for regulators to find the crucial balance between safeguarding players and allowing them to enjoy the games they love.
To conclude, these are some of the things that can be learnt:
Strict stake limits will drive some players towards unlicensed casinos.
Unlicensed casinos are a major concern as they are not subject to the same strict regulations as licensed casinos.
Unlicensed casinos may not protect players from fraud or unfair play and may not pay out winnings if they go bust.
Unlicensed casinos can hit tax revenues collected by governments.
It's important for regulators to crack down on unlicensed sites and ensure that the industry operates in a fair and transparent way.
And it is crucial to strike a point somewhere between adequate player protection and the ability of those players to enjoy a pastime they love.
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