The UKGC has just announced new promotional restrictions for licensees, capping bonus wagering requirements at 10xbonus.
Duncan Garvie, gaming regulation expert and Head of ADR for Casino Reviews, believes this is “catastrophically bad policy.” He provided his detailed opinion on the changes to VegasSlotsOnline News.
Duncan Garvie, Head of ADR for Casino Reviews:
This catatrophically bad policy hobbles the regulated industry’s ability to compete with the black market. It is everything that I’ve spoken against in the last few years. Regulation that sounds good, but has not considered the deeper consequences of the policies. History has already shown us what will happen when this restriction comes into place.
On the surface of the conversation, limiting wagering requirements obviously sounds like something that’s good for consumers. Everybody likes free money. The lower you push down wagering requirements the more like free money gambling bonuses become.
But this fails to take into consideration that the reasons that wagering requirements increased in the first place.
How Wagering Requirements Have Changed
In the early 2000s, when I first started playing, bonus wagering requirements routinely used to be 10xbonus. In the late 90s they were even lower than that. The industry didn’t start out wanting larger wagering requirements. They prioritised making the bonus terms attractive to players.
with low wagering requirements it was actually the player that had the advantage
Wagering requirements started to increase, in parallel with the introduction of other bonus restrictions like game limitations, because smart players became aware that with low wagering requirements it was actually the player that had the advantage any time that they were given a bonus. And with the rise of the internet, that information soon became widely available.
“Bonus abuse” as the industry likes to call it, became widespread, and with the rise of fraudulent practices like multi-accounting, bonuses started to represent a significant threat to the profitability of the sector. Like it or not, gambling is a business. For operators to remain profitable, they have to be able to sustain an advantage over players. Offering the chance to win to the individual, but knowing that across all players they will profit.
The industry’s response to the growing number of players who had a mathematical edge over the house due to bonuses was to add bonus restrictions that reduced their exposure. Some games started to be excluded from bonus play. Maximum bet caps were introduced. And wagering requirements rose.
Without these terms, bonuses become a massive liability for the sector. One that jeopardises the business model upon which the industry remains profitable.
Historic Parallels – How a New Jersey Lawsuit Made Blackjack Worse for All Players
History has shown us what happens when we restrict the industry’s ability to protect itself from winning players. In 1979, legendary card counting pioneer Ken Uston was barred from New Jersey casinos. This wasn’t a new experience for him. He’d been barred from casinos all over the world because he was a skilled, winning player. But this time he didn’t let the matter lie. Mr Uston took the casino to court, contesting that they were discriminating against winning players.
In the end the New Jersey Supreme Courts ruled that casinos could not backoff card counters.
How did the industry respond to this? They couldn’t allow players to consistently beat them, as that undermined their ability to sustain a profitable business. And now they weren’t allowed back off winning players, meaning they couldn’t target the players that were causing the problems. So they did the only thing they could do. They made the games worse for all players. They added more decks to their games and they shuffled more often. This increased the house edge over all players and detracted from the gaming experience for everyone. All so that Ken Uston couldn’t get backed-off.
every player that has sat down at a blackjack table in the state since has faced a more detrimental ruleset
I have a great deal of respect for Ken Uston as a pioneer in the field of advantage gambling, but his lawsuit in New Jersey handcuffed the industry, preventing them protecting their games. And in doing so, every player that has sat down at a blackjack table in the state since has faced a more detrimental ruleset.
History Repeats and Consumers Lose
What we’re seeing with the UKGC’s incoming restriction on wager requirements will have exactly the same consequence. 10xWR are unsustainable for gambling operators. And there are two responses to this that the industry will have to take:
i) Bonus offers will become far less attractive;
ii) Game RTP settings will be reduced to provide the house a greater edge over players.
Gambling will end up costing consumers more due to these regulations that are intended to improve the ecosystem for players.
Public Consultations Don’t Result in Effective Regulation
This move highlights the core limitations with basing policies on public consultation. Public consultations ask a question in a vacuum. Consumers are presented with a choice, without understanding the wider context or consequences of their decision. Respondents make a surface-level assessment of what is in their best interests, and all too often it ends up backfiring.
Public consultations are relied upon to give decision makers plausible deniability for the decisions that they reach. Rather than reaching informed decisions, based on evidence and knowledge of the likely outcomes, regulation morphs to the outcome of public consultation, regardless of whether or not this actually achieves what it was intended to achieve.
And the Black Market Wins!
Sitting behind all of this is the black market. And illegal gambling operators win big with the introduction of this type of restriction on the legal market.
The legal market is already struggling to compete with the black market, which can offer bigger and better bonuses due to lower overheads. With the introduction of this wagering requirement cap, the headline bonus offers that the legal market will be able to provide will degrade again, which will result in players migrating to the black market.
How to Make Bonuses Better
The Gambling Commission appears to have two core justifications for the introduction of this restriction:
i) That wagering requirements are confusing to players (“Such high wagering requirements could confuse consumers”)
and
ii) That high wagering requirements cause harm by leading players to play for longer than they ordinarily would (“lead them to gamble for longer, and faster, than they are used to”)With complete candor, I do not see how it can be argued that this policy reduces confusion for consumers at all. Is multiplying by one number a significantly different process to multiplying by a different number?
the more effective road is to make the wagering requirements clearer in promotional advertising
The only plausible grounds that I can see to claim that the cap makes wagering requirements less confusing would be that player’s don’t expect wagering requirements to be higher than 10x. If that is the argument that is being made, the more effective road is to make the wagering requirements clearer in promotional advertising.The second grounds for these policies, that of wagering requirements encouraging players to over play, is addressed simply by placing restrictions on bonus expiry dates. It’s not the wagering requirement itself that leads players to gamble for longer than they ordinarily would, it’s the fact that the promotion has a ticking clock built into it, meaning that if you don’t complete the wagering requirement within the state period, the bonus expires and you lose everything. If the desired result is to prevent players being forced into overplaying, then removing the expiry data and let players complete the wagering requirements at their leisure.
The Road to Hell…
The Gambling Commission is clearly well intentioned with its approach to this policy, but the likely outcome is bad for consumers, bad for the licensed market, and a win for illegal gambling. I sincerely hope the Gambling Commission will re-evaluate this policy before it comes into force.