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A Ballooning Industry and a Government Holding a Pin

How the UK online bingo market is changing after the new financial regulations and content limitations

ONLINE BINGO AS WE KNOW IT IS LEAVING GROWING PAINS BEHIND AND HITTING THE TURBULENT TEENAGE YEARS.

In just a decade, the gross gambling yield has grown with 66% to reach a record £3.9bn in 2017. Income from remote betting (online casinos, online poker and online bingo) was just £817m in 2009 but has since reached £4.5bn, making up more than a third of the industry. It’s obvious that the online gambling industry is doing more than well, but will online bingo continue to grow after all the political and financial changes?
2017 has been an interesting year for online bingo. Mildly put. New rules about the design and content, tax regulations and ad limitations have influenced the number of sites and closures and changed the way some of the most famous brands look and advertise.

But it’s obvious that bingo’s transformation has been a long process spanning decades. If we accept that legal and regulated online bingo was born in 2005 with the Gambling Act and the creation of the UK Gambling Commission, it means that in 2018 we’re entering the difficult teenage stage. Leaving cute fluffy mascots behind, operators now need to offer a level of responsibility and maturity in their product development and marketing and deal with political and financial changes.

But before we get a detailed look at the statistics from last year, and make some predictions for the rest of 2018 and 2019, let’s have a brief overview of the milestones of the regulated bingo industry. Gamlbing Industry GGY

Online Bingo Key Moments

Bingo’s Transformation through the Years

The first bingo websites were launched in 1996 and while back then no one could have predicted the popularity this phenomenon would gain, as the internet caught on, the convenience of playing online took players away from land-based halls. While this lead to the closure of bingo premises across the country, in the years to follow it would actually revive the whole bingo industry, as online bingo halls attracted new younger and tech-savvier audiences. In 2017, we saw the number of land-based halls increase for the first time in years.

The Estimated Number of Online Bingo Players in the UK Is 3.5 Million
FIGURES for online bingo participation from March 2018 reveal a jump from 20.4 per cent to 39.8 per cent, the greatest increase in people playing online from 2016. 300,000 people in the country have switched to online gambling, with one in five players over the age of 55 enjoying online games from their homes. Online participation has increased across most online gambling activities, mostly bingo.
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A favourite pastime of Brits for over a century, bingo was first legalised in the 1960s with the Betting and Gaming Act 1960 which allowed gambling for small sums. Following recommendations by the Royal Commission on Betting, Lotteries and Gaming, the Act which came into force on January 1st, 1961, legalised additional forms of gambling in the UK. As of May 1961, bookmakers could open a shop and in just four years, 16,000 betting shop licenses were issued.

Under this act, bingo was now officially a legal form of gambling and the number of members across UK bingo venues grew rapidly to ultimately reach 14 million memberships in 1963, with as many as 150,000 customers visiting daily Mecca Bingo’s shops. In the 1980s there were an estimate of 1,600 bingo halls but with the advent of the internet and bingo sites opening online in the 1990s, purpose-built halls openings came to a standstill. The decline continued throughout the 2000s and 2010s and when a bingo venue opened in 2016, it was the first in seven years. But it wasn’t the last one and in March 2018, there were 649 land-based bingo halls – 13 more than in March 2017.

8,532 Betting Shops as of March 2018
649 Bingo Premises as of March 2018
152 Casinos as of March 2018

Gross Gambling Yield

Bingo sector GGY remains steady at £687m, 46.3% of which is derived from machines

Remote Market Share by Total Gross Gambling Yield

According to data from the UK Gambling Commission, the number of land-based bingo halls has declined significantly over the last couple of years, as a result of the shift from land-based to online. The UKGC’s report also shows that the number of licensed bingo premises has gone down by almost two-thirds over the last three decades to just 636 in 2017. But 2018 seems to hold brighter prospects for land-based bingo halls. Their numbers have risen for the first time in a decade after reaching a gross gambling yield of £686.79 million in 2017. Remote (not land-based) bingo accounts for 3.4% of the total gross gambling yield according to the UK Gambling Commission’s report for 2017.
Gross Gambling Yield from Remote Gambling

Remote gambling (casino, betting, and bingo combined) make up 34% of the entire GGY of the UK gambling industry for the period of April 2016 to March 2017 which comes to a total of £13.8 billion, a two-percent increase compared to the previous one-year period, making remote gambling the sector with the biggest revenue, followed by non-remote betting and the National Lottery. Online bingo is just 3% from the remote sector, where online casinos are in the lead with 55% followed by online betting which is second with 37%.

35% Remote Sector Market Share Gross Gambling Yield

Licenses

Licenses Issued by the UK Gambling Commission

In 2017, there were almost 29 million active user accounts and 32 million new account registrations across online casinos, sportsbooks, and bingo sites. Remote operators held £666.11 million within these accounts.
In 2017, the UK Gambling Commission issued licenses to 788 remote gambling activities. The numbers for 2015 and 2016 are 706 and 754 respectively which is a certain indicator that online gambling is not only retaining its popularity but is drawing more audiences every year and operators not based in the UK are tapping into the UK online gambling market. The number of licensed remote bingo activities is 54, which is 4% less than the previous year. Again, bingo comes third after casinos and sports betting. More than 50% of all licenses were issued to gambling software and online casinos.
Remote Gambling Activities Licensed by the UK Gambling Commission
In 2017, most licences to remote operators were issued to operators based in the UK, Malta, Gibraltar, and Isle of Man.

The Gambling (Licensing and Advertising) Act 2014 added several provisions to the Gambling Act 2005 and required that remote operators (those operating outside of Great Britain) hold a UK operating license in order to provide gambling services and advertise to British customers. Another requirement was that they pay gambling duty on UK revenue in Great Britain, regardless of where their operation is based.

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This meant that operators based in countries in the EEA (the European Economic Area), Gibraltar and the jurisdictions on the UKGC’s whitelist (Alderney, Isle of Man, Tasmania, Antigua and Barbuda) also had to obtain a UK license and pay 15% of gross gambling profits on all transactions with customers residing in the UK.

Legislation and Regulation

The Online Gambling Industry Faces New Taxes and Content Limitations

2017 was predicted to be the year of legislation and regulation for remote gambling and even though a snap election put legislation changes on hold for the first half of the year, in August a levy on bonuses was introduced after the UK’s tax authority, Her Majesty’s Revenue and Customs (HMRC) implemented new regulations. With operators having to pay 15% general duty on all free or discounted online bets, the first casualties of the Finance Bill 2017 were the no-deposit bonuses. And that was just the start.

The ban is on payments both online and in-store and includes physical card transactions as well as other methods like Apple Pay and PayPal.
The Ban Is on Payments Includes Also Apple Pay and Paypal
Following a recent EU directive, companies across the continent are now similarly banned from adding surcharges.
Following a New Law That Came into Effect on January 13th
Stagnation and possible decline were anticipated after the passing of the Finance Bill, so it was no surprise to see a drop in new sites opening and an increase in site closures in 2017. At the end of the year, there were 421 active sites, of which only 40 newly open sites – a record low since 2012. The year saw 55 site closing – a number which is almost three times bigger than the one for the previous 12-month period.
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The all-time low in bingo site openings on the UK market last year could easily be attributed to the free bets tax, but a look at other changes in legislation and regulation over the last couple of years reveals more reasons. Not only did Her Majesty’s Revenue and Customs (HMRC) implement the free bets tax, but it also amended the definition of “prizes” in order to prevent operators from equating the value of free plays with prizes offered in a bid to reduce taxable profit.

Although gambling accounted for around 3% of the UK’s £5.4 billion TV ad spend, and there has been no sign of correlation between increased advertising and problem gambling, the UK Gambling Commission implemented tighter controls on advertising and how operators present their offers, deeming that their Terms and Conditions needed to be clearer, dismissing any ambiguation. Another limitation was imposed on the design of the bingo websites.

51% of People Have Seen a Gambling Advert on TV in the past Week
53% of Gamblers Have Been Prompted to Gamble by Adverts
20% of Gamblers like Gambling Companies on Facebook and 30% of Gamblers Follow Gambling Companies on Twitter

Cartoon Characters Are Not Allowed to Be Used by OperatorsAccording to a UKGC report on young people and gambling 25,000 children aged between 11 and 16 were problem gamblers. With concerns about the growing number of children gambling in a “consequence-free environment”, operators could no longer display “child-like in nature” cartoon characters – whether their mascots or characters from slot games – on their websites or third-party media. According to the Commission, “the use of particular colours, cartoon and comic book images, animals, child- and youth-orientated references and names” could appeal to under-18-year olds.

New Sites

New Sites in 2017 and 2018

New Online Bingo Sites Opened in 2017

Dragonfish is the network with most new sites, having launched the Real Bingo Network which brought innovation by opting out of the run-of-the-mill match-up bonuses and the attached wagering requirements. Cozy had to stop offering its famous £15 no-deposit bonuses and change the visuals across most of its sites which apparently has caused them their appeal to individuals opening white-label sites. Still, the network managed to roll out 12 new sites. Jumpman Gaming launched only 7 new sites, but it was the network that five of the seven individuals opening white-label sites opted for. Due to changes in its platform, some of its websites were still “coming soon” in 2017 and had to wait until 2018 to be launched.
Coming Soon Bingo Sites for 2017

26 sites couldn’t make it to launch and were still in the salle d’attente as we bid 2017 adieu. 12 were cancelled altogether and five have been in the making for over a year. With revamped offers and a reinvigorated retention rate, Dragonfish solidifies its position of the most prolific network with 15 bingo sites in the pipeline while Cozy is still spiralling down on the productivity curve with only four 2018-scheduled launches. By June 2018, two sites using Dragonfish software were up and running and gaining popularity by the day. Microgaming and Jumpman Gaming each rolled out one new site in April.
Bingo Sites Closures 2017 by Software Provider

Site Closures in 2017

The regulation and legislation changes of 2017 have had a palpable impact on site closures. 55 sites shut down for good compared to just 20 in the previous year. Almost half of them closed their virtual doors in the months after the Finance Bill was passed, a clear indication that the new tax on bonus funds has had a major impact on online bingo operators. Cashcade was acquired by GVC holdings in February 2017, and some of the changes that the company underwent included the closure of 11 sites and signing an endorsement deal with a Hollywood actress who replaced the famous cartoon fox mascot of Foxy Bingo.

Bingo Networks

Bingo Networks are Changing Their Business Strategies to Better Meet Both Customer Demand and Regulations

Dragonfish holds its undisputable position of an online bingo behemoth for yet another year as it supplies the software for almost half of all active websites and has also launched the biggest number of new sites in 2017 and the first half of 2018. It changed its bonus offers, removing wagering requirements, and now focuses heavily on customer retention with its Joy Gem Club that encompasses the biggest bingo sites in the network. Despite losing its no-deposit bonuses and recognizable mascots and having its position in the white label sector destabilised, Cozy is still staying ahead of competition holding 25% of the active bingo sites.

DESPITE CEASING TO OPERATE THE SUN BINGO AND FABULOUS BINGO WEBSITES IN AUGUST
2016, GAMESYS REPORTED A 9 PER CENT INCREASE IN TURNOVER TO £230.7M FOR THE
YEAR ENDED MARCH 31ST, 2017.

Online Bingo Sites in 2017

Virtue Fusion which is owned by iGaming giants Playtech stepped down from the third place after closing some of its smaller sites and transferring some to Bede. Although nowhere near the proliferation of Dragonish, Jumpman Gaming is becoming a serious market contender having overtaken Virtue Fusion in terms of active sites and now being the top choice for individuals launching white label sites. They still have pending sites in 2018, so opening them will only solidify their position once they materialise their full suite of platforms.
Annual Online Bingo Awards

2018 is still promising as we’re waiting for Yggdrasil and Mr Q to get the show on the road with their highly anticipated mobile-first new platforms. Since this will be the first new network addition in six years, it could potentially change the online bingo scene and open the gates for a slew of white label sites hot on the heels.

Industry Predictions for 2018

The Online Bingo Industry in the UK Will Face More Changes

Further sustainable growth is not impossible despite all the obstacles the industry has to face. The presence of active online bingo sites remains stable and we’re expecting to see more sites open in the second half of 2018 and in 2019, but with the regulatory and financial squeezes, it’s also likely that some of the ‘coming soon’ sites may never see the light of hosting or that more sites, especially owned by individuals, may close in 2018.

Customer Retention and Account Re-Activation
With customer retention and account re-activation as the main focus of operators, it’s likely that fewer sites will be opened in 2018 and 2019. We’ve already seen operators lose the no-deposit bonuses and implement new type of welcome offers with no wagering requirements so it’s obvious that the focus is no longer on new registrations which is easy to explain with the small percentage of first-time depositors.

While operators may have breathed a sigh of relief and enjoyed a break from the welcome bonus competition, it’s a thin line between market consolidation and stagnation, as the only new networks expected to diversify the online bingo scene – Mr Q and Yggdrasil are still postponing the launch of their “cutting-edge game-changing” products.

Many of the Biggest Brands in the iGaming Industry Fined by the UK Gambling CommissionWe’ve already seen some of the biggest brands in the iGaming industry fined by the UK Gambling Commission in the beginning of 2018, so we can only expect UK operators to get even more heat by the Commission, the Advertising Standards Agency (ASA) and other regulatory bodies. In 2017, 888 were hit with a record fine of £7.8 million for failing to protect vulnerable clients.
  

OPERATORS WILL BE CLOSELY WATCHED FOR SELF-EXCLUSION PRACTICES AND
INFORMATION THEY SHARE WITH CUSTOMERS ON DIFFERENT CHANNELS.

60% of Gamblers Have Seen or Received Gambling Related Information from an Operator
Financial Limits are the Most Popular Gambling Management Tool with 10% of Online Gamblers Using Them
6% of Gamblers Have Ever Self-excluded
2018 Started with Fines for Few Brands
2018 started with William Hill being fined £6.2 million for breaching anti-money laundering and social responsibility regulations, then in March SkyBet was given a penalty package that would see them pay £1 million for allowing self-excluders to open new accounts, and in May 2018 LeoVegas was fined £600,000 for misleading advertisements.
Consensus in the industry seems to be that the Commission will issue further penalties, with some experts going as far as to predict that we may see one of the biggest brands become a scape goat and have their gaming license suspended. Of course, this is merely speculations and we can only wait and see.
Putting the Pieces Together

Banned GamesIn October 2017, the Committee of Advertising Practice, the Advertising Standards Authority, the Remote Gambling Association and the UK Gambling Commission jointly issued a letter that emphasised the importance of existing regulatory frameworks and the need for removing or amending child appealing content from operators’ websites and third-party media like the App Store, affiliate sites, and social media.
 
Games Banned From Demo VersionsAlthough the letter didn’t set any clear requirements, it urged operators to hide child-like in nature characters, animations, and product names reflecting or being associated with youth culture behind age-verification wall and remove them from freely accessible space like the homepage of their website and search engine advertising. Game providers will rightly clamp down hard on all operators using their games in the UK, specifically on pre-age verification demo games.

 
Considering the graphics and texts on most slot games, some experts predict that somewhere between 30% and 50% of the current slot games could get banned as demo games in 2018. So far, no certain games have been banned but considering the warnings about more fines and the content on already flagged games, it is not a stretch to assume that a list of games banned from demo versions or being generally available to view is in the making.

How the Point of Consumption Tax Works

UK PoC Tax Rising
So far, the current UK conservative government hasn’t been exactly gentle on the gambling industry and that coupled with the fact that the current UK Prime Minister introduced the UK point of consumption tax when she was Home Secretary, plus all the regulations and limitations from the Gambling Commission, ASA and CAP could only mean more and tighter controls on bingo operators and affiliates. Some industry experts have even speculated that the PoC tax could increase from 15% to 20%, even 25% in 2019.
A Great Bingo Website like Clockwork

Fallout from Brexit
The UK’s pull-out from the EU is scheduled to happen by the end of March 2019 and based on the conditions it manages to negotiate, particularly with Spain over Gibraltar, Brexit may have a negative effect on the operators and affiliates in the iGaming and gambling industries in the UK if EU member states decide to restrict or block UK-licensed operators. It’s possible that some other EU member states will start to regulate their markets further and follow suit by introducing stricter regulations, governing advertising copy and encouraging responsible gambling from operators and affiliates.

Tips

In conclusion

Even though 2017 has been eventful with newly imposed financial and advertising limitations, bingo operators have been able to weather the economic downturns and regulatory frameworks much more successfully than their iGaming counterparts. Online bingo is as reliant on player liquidity as online poker for example but because of the social aspect of the game and the regional nature of bingo rooms, the best online bingo sites manage to build their players into communities, despite the need for liquidity. Live chat hosts, live caller games, fun content and challenges enhances player engagement as they play well in social media which is steadily becoming a key marketing venue for online bingo.

The online gambling sector is inherently dynamic and despite the surge in openings in the last year, there’s always room for new brands which are presented with all the opportunities to make a splash and even divert some players from the A-list bingo brands which are now focused on retention. Something that would be unfeasible with a land-based venue, considering the financial back-up needed to open and operate a hall.
The Bingo Host Plays a Critical Role
Operators' Road Ahead
The exposure brands get online can never compare to foot traffic. But some operators can capitalize on both online and offline bingo venues, especially with the opportunities opened by technologies like the omnichannel, giving operators never before seen opportunities to reach both ends on the demographics spectrum, which means that both remote and in-person verticals of the bingo industry have all prerequisites for a steady and continued growth. It’s likely that the bingo industry will undergo more changes in the next years, as all the new taxes, design limitations and advertising controls as of recent will send ripples across the industry.
Our advice to
  • CUSTOMERS

    Read the Terms and Conditions of bingo websites carefully. Check the license of the website and only provide your financial information and personal details to secure sites.

  • AFFILIATES

    Get your sites checked and authorised by the ASA and CAP’s Copy Advice team, so that you are confident all offers are valid, and your website is perfectly compliant.

  • OPERATORS

    Give players what they want: clear T&Cs, no-wager bonuses, and more retention offers. Make sure your site is compliant with the requirements of the UKGC, ASA, and CAP.