The UK is facing a triple threat: energy price rises, general inflation and recession. All of these will directly impact the UK’s gaming industry.
While countries around the world have been affected by financial policies, energy disruptions and supply constraints, the UK has suffered the most severe effects. The annualized inflation reached 8.5% in the US, 6.5% for France, and 8.6% for Europe. However, it was 10.1% in Britain.
It is no secret that Britain has been in a difficult period in recent years. This sector is not thriving. There isn’t much growth potential in an already mature market for gaming. The constant regulatory uncertainty, which has been the theme for some time, makes it look very grim. Many businesses are reporting slow revenues due to the current environment. Many premium operators, such as Entain – whose online casinos Bwin and Party Casino offer no-deposit bonuses – may be affected.
A YouGov poll found that 30% of UK gamblers will cut back on their gambling if the cost to live continues to rise. Citi, a multinational American financial services bank and investment bank, predicts a 18% price rise by 2022. This price rise will have devastating effects on the country’s gaming industry.
UK Gambling Companies Report Revenue Decline
The UK’s gambling industry is saturated. There is little room for growth. It is also constantly facing regulatory uncertainty. It is therefore not surprising that many UK gambling companies have reported a decline in revenue.
A Kindred spokesperson stated that the UK market is suffering from the effects of self-imposed affordability controls to protect players. These measures will be implemented by gambling operators over the next few quarters. These measures, despite their immediate impact on revenue in the short term, ensure a long-term customer base.
William Hill and 888 recently merged, resulting in a 25% decline in revenue. This was due to the social responsibility measures that they had to take ahead of the UK’s legislative reforms. Itai Pazner (CEO of 888) stated that the group’s financial performance is reflective of the UK’s market conditions. However, the company remains optimistic and believes that its proactive actions to better protect players put it in a stronger place.
Rising Energy Costs Are Worrying the Gambling Industry
The UK’s land-based gambling industry is concerned about not only regulatory uncertainty, but rising energy bills. Experts expect this to peak in winter. According to Auxilione (an energy consultant), the average household’s energy bill will reach PS4,000 in January. Businesses will feel the same pressure as consumers, particularly those who have large areas to heat.
John O’Reilly, CEO of Rank Group, stated that the company will be adversely affected by the rise in energy prices. The Rank Group’s energy costs have increased from PS13 Million in 2020-2021 to PS23 Million between 2021-2022. It is possible that the cost of energy could rise to PS46 millions by 2023.
GBC Calls for Government Intervention
Rank claims it can manage the costs but not all operators are as confident. The British Gaming Council (BGC), recently urged the prime minister for intervention because businesses are experiencing a 30% increase in their energy bills. The chairman of the BGC Michael Dugher warns that businesses may have to close down if there are no protective measures.
Dugher stated that operating costs are increasing at an alarming pace. If the government does not take steps to protect them, the nonstop rise in energy prices will have a devastating impact on the leisure sector and the hospitality industry. He stated that casinos are vital to the UK’s tourism and hospitality industries. These businesses, which have been struggling to recover from the pandemic, now face a new crisis: increased operational costs.
