In April 2023, the Department for Digital, Culture, Media & Sport (DCMS) published a white paper outlining the Government's plans to modernise the regulation of the gambling sector.
A key proposal was the introduction of maximum stake limits for online slots games. At present, the absence of limits on stakes in the online slots contrasts with the stake and prize limits imposed on gaming machines in the land-based sector.
The Government consulted on a range of proposals, which it said would align with its objective of regulating the online and land-based gambling sector equitably while addressing the risks associated with high stakes play on online slot games.
The consultation received 98 responses from an array of stakeholders and the Government issued its response on 23 February 2024, in which it settled on the following:
- A maximum stake limit of £5 per spin for adults aged 25 and over; and
- A maximum stake limit of £2 per spin for adults between the ages of 18 and 24.
Following publication of this response, draft regulations will be introduced to Parliament which, subject to approval, will impose new mandatory licence conditions that the Gambling Commission will be responsible for enforcing.
Once this secondary legislation has been passed, the Government expects a minimum of six weeks' transition period for operators to introduce a £5 stake limit for all customers, with a further six weeks for the development of any technical solutions required for the lower stake limit of £2 to be implemented for customers under the age of 25. At the end of this transitional period, any operators unable to develop the necessary technical solutions to distinguish those aged under 25 will be expected to offer a maximum stake limit of £2 across the board.
Scope of Stake Limits
While key terms such as ' stake', and 'game cycle' are commonly understood amongst industry stakeholders, they are not all defined in legislation. As such, the Government has proposed a working description of these terms to ensure that a policy on maximum stake limits can have a clear scope and be implemented effectively.
The proposed definition of 'slots' is set out in the consultation response as “casino games of a reel-based type (including games that have non-traditional reels)”. This is consistent with the Gambling Commission's definition of online slots published in 2021. Meanwhile, 'maximum stake per spin' will describe the maximum amount that a player can pay or risk per spin or game cycle. The Government has made clear that should these definitions prove too narrow to attain its intended policy goals, they will be revised accordingly.
Stake Limits for Adults Aged 25 and Over
Despite support in some quarters for a lower £2 stake, the Government resolved to set the maximum stake limit for adults aged 25 and over at £5 per spin, suggesting that this would achieve its aims in a proportionate way, while minimising unintended consequences, such as customers being driven to the black market. Industry stakeholders expressed concern that restrictions will inevitably lead to growth in the unregulated market, and generally supported a higher limit of £10 per spin.
The Government also highlighted that a £5 stake limit aligns with the current stake limit for category B1 gaming machines in land-based casinos, which it suggested are most comparable in terms of risk in a land-based setting. The Government also suggested that the limit takes into account the structural differences between online and land-based gambling, noting that while online gambling is more accessible, advancements in harm detection algorithms and account-based protections cannot easily be applied offline (where stake limits for lesser categories of machine are lower).
Once the statutory stake limit is implemented, operators will not be permitted to offer higher stakes on online slots games to adults aged over 25. The Government intends to review and if necessary, adjust the stake limits in the future.
Stake Limits for Adults Aged 18 to 24
For young adults aged 18 to 24, the Government will introduce a lower maximum stake limit of £2 per spin, citing evidence of this age group's greater vulnerability to gambling-related harm. A separate limit for young adults aligns with the Government's targeted approach to protect those most at risk while minimising restrictions to others.
Respondents who were not in favour of a separate limit raised concerns that some adults would be unfairly discriminated against based on age, while creating a further disparity between the online and land-based sectors, the latter having universal stake limits across all adults. Concerns were also raised that this proposal would incentivise young adults to gamble via the unlicensed sector in order to access higher stakes. While taking these responses into account, the Government concluded that this age group's stronger association with problem gambling justifies increased protections.
Impact
The Government said it expected the proposed stake limits would lead to a reduction in Gross Gambling Yield (GGY) from online slots of approximately 5.2% and of all remote gambling by approximately 2.6%. Alongside the reduction in GGY, operators can expect to incur costs in implementation and testing.
A final stage impact assessment, to be published alongside the statutory instrument, will provide a detailed cost-benefit analysis of the new proposals, including considerations for small and micro businesses and the potential for unintended consequences.
Meanwhile, Regulus Partners have suggested that the potential impact on slot revenues may have been underestimated, due to the use of outdated research. They have suggested that the revenue generated by stakes over £5 is approximately 23%, equating to approximately 10% of the remote sector, suggesting far greater potential impact.
Our Analysis
While the introduction of maximum stake limits for online slots is a pivotal development in Great Britain's gambling regulatory framework, it has been anticipated for several years, and the £5 limit is not unexpected considering the corresponding limits in the land-based sector. Many operators have proactively implemented a host of player safety measures in response to the various consultation proposals flowing from the White Paper, including introducing stake limits.
Whilst the main policy objective behind these proposals is to mitigate risk of harm to players, there is widespread concern that the very customers who are most at risk will simply turn to the readily accessible unregulated market.
Operators must now focus on implementing the necessary adjustments to comply with the new limits. For further information, please get in touch with us.