The UK is gearing up to face a triple threat of energy price hikes, general inflation, and recession, all of which will directly affect the gaming industry in the country.
Although financial policies, energy disruptions, and supply constraints have affected countries worldwide, the UK is experiencing the worst hit. Annualized inflation touched the 8.5% mark in the US, 6.5% in France, and 8.6% in European countries. But in Britain, the percentage was 10.1%.
It’s no secret that in recent times, Britain has hit a rough patch, and it isn’t exactly booming in this sector. The reality is, there’s not much room for growth in an already mature gaming market. Adding to this, the continuous regulatory uncertainty – which has seemed to be the running theme for some time – makes for a rather bleak outlook. Indeed, many businesses have declared sluggish revenues because of the current situation. This includes many premium operators such as Entain, whose top-ranking online casinos like Bwin and Party Casino – both of which offer no deposit bonuses – may very well suffer.
According to a YouGov poll in July, 30% of UK bettors will reduce their gambling activities if the cost of living continues to rise. Citi, the American multinational financial services corporation and investment bank, has predicted an 18% hike in prices by the end of 2022. Such a price hike will have a destructive impact on the country’s gambling industry.
UK Gambling Companies Report Revenue Decline
The gambling industry in the UK is already saturated and hardly has any room for expansion. Moreover, it continuously faces regulatory uncertainties. Under these circumstances, it is not surprising that several UK gambling companies reported a revenue decline.
A Kindred spokesperson said that the UK market has been reeling under the impacts of self-imposed affordability checks to protect players. Gambling operators will continue to implement these measures over the next few quarters. Despite their short-term impact on revenue, these measures ensure a sustainable customer base in the long term.
888, which recently merged with William Hill, reported a 25% revenue decline because of the social responsibility measures it had to implement ahead of the legislative reforms in the UK. Itai Pazner, the CEO of 888, said that the group’s financial performance reflects the UK’s market conditions. But the company is optimistic and says that its proactive actions to protect players better put it in a stronger position.
Rising Energy Bills Worry Gambling Industry
The land-based gambling industry in the UK is worried not only about regulatory uncertainty but also rising energy bills, which experts expect to reach a peak during the winter. Auxilione, the energy consultant, predicts that the average household energy bill will rise to £4,000 by the following January. Along with consumers, businesses will also feel the pressure, especially those with large spaces to heat.
John O’Reilly, the CEO of Rank Group, says that the energy price hike will impact his company in a significant way. Energy costs for the Rank Group have increased from £13 million in the 2020 – 2021 period to £23 million between 2021 and 2022. The cost may rise to £46 million by 2023.
GBC Urges Government Intervention
Rank says it can handle the costs, but not all operators can be as confident. Recently, the British Gaming Council (BGC) urged the prime minister to intervene because businesses are facing a 300% increase in energy bills. Michael Dugher, the chairman of the BGC, warns that businesses will have to shut down in the absence of protective measures.
Dugher continued by saying that operational costs are rising at an alarming rate. Also, nonstop increases in the price of energy will have a catastrophic impact on the leisure and hospitality sector if the government takes no steps to protect them. He said that casinos are important to the tourism and hospitality sectors all over the UK. These companies, which are struggling to recover after the global pandemic, are now facing a new crisis in the form of increased operational costs.