The UK used to be something of a gambling haven. The 2005 Gambling Act allowed companies freedom to offer their products to British customers and many did just that. With a huge selection of bookmakers and casino websites offering their products and services here, as in any industry, it became important to stand out from the crowd. One of the best ways to do that was to offer a generous “welcome package” of free bets and other perks that customers couldn’t refuse. The rationale being that once signed up, it’s likely recreational players and bettors will favour the convenience of using a service that they’re already registered to for future bets. Just to make sure players weren’t tempted to go and check out the competition, sites would offer additional perks on certain sports, tournaments, or casino products as follow up promotions to the welcome bonus.
Extravagant bonus packages were very much the norm in the UK gambling industry until recently. Free bets first came under fire during the spring of 2014. The Department for Media Culture and Sport documented a vast increase in the scale of gambling advertising. Advertising regulators, ASA, supported the government findings that October. Not only did the increase concern them, but a major issue they found was that many people considered free bet adverts to be misleading. In response to these reports, the UK Gambling Commission published amendments to their Codes of Practice. These included adjustments to the rules on marketing and advertising, with the aim of achieving a more open and fair representation of bonus offers, amongst other social responsibility amendments.
A Bill was introduced in 2015 that sought to clarify the meaning of “unfair” terms and conditions. It also “blacklists” some conditions meaning that they can never be binding. A main bone of contention was that operators had been neglecting to clearly display that extensive terms and conditions would apply to bonuses. This was particularly the case with online “banner ads”. Although this no doubt caused frustration to bookmakers and casino operators who probably lost out on a few drunk clicks lured in by crafty marketing, it was hardly the potential death blow that was coming for free bets at UK online casinos.
In August this year, changes set out in an amendment to the 2014 Finance Bill took affect and with them, we saw much stingier promotions from our favourite bookmakers and online casinos. The legislation sought to change the taxation of gamblers to ensure that all activity taking place in the British Isles was effectively taxable. The main point of the changes was to tackle the problem of companies basing themselves in areas of the world where corporation tax is cheap and offering their wares to UK citizens whilst paying no fees to the government here. This was possible under the 2005 act because companies were taxed at the supply, rather than the consumption point. If that supply came from a part of the world that the UK government couldn’t tax (i.e. most of it) then they’d receive no revenue. The 2014 legislation stated that any operator wanting to serve the UK market and accept payments from British citizens must be licensed by the UK Gambling Commission. They would also be subject to a 15% betting duty tax on wagers made by any British player.
Understandably, this had a large effect on companies providing services to the once fertile UK market. Several providers based outside of the UK who were essentially taking advantage of the favourable conditions up sticks and left. Those that remained faced an additional 15% burden on their income. With less competition and profit margins to play with, there was also less incentive and ability to offer free bets. While many are taking a cautious approach and have removed their offers, not all casinos have stopped offering free bets. Of those that remained, many included much more stringent wagering requirements or general terms and conditions. These moves allowed bookmakers and casino operators to continue to offer free bets but dramatically reduced the likelihood of a player actualising any profit from them. This was a win-win situation for the providers. They could give the illusion of an exciting bonus but rarely be required to pay out anything for it. However, an amendment to the 2014 legislation was on its way.
In March of 2016, chancellor of the exchequer, George Osbourne, introduced a new proposal to the country’s gambling laws that would extend the point of consumption tax to bonus money and free bets. It’s estimated that this, plus other government measures taken in 2016, would bring in almost £3 billion to the government’s coffers per annum by 2019. Whether this figure considers the reduced numbers of people gambling having not been drawn in by that £50 free bet on the European Championship Final or whatever is unclear. What is clear is that the amendment was brought into effect in August 2017 and from now onwards, providers will have to pay the 15% betting duty on all bets whether they’re free or not. Naturally, this is going to discourage many from offering the juicy bonuses of old.
We’ve already started to see the fall out of the August enforcement deadline. Some but not all casinos have stopped offering free bets. Those that remain have often reduced them considerably. Take Bet365, for example. Earlier this year, they changed their incredibly generous “bet £200 get £200 bonus” sign-up offer to a more cost effective (for them) “bet £100 and receive a £100 free bet”. In addition, free bet bonuses that used to carry relatively fewer terms and conditions now have increasingly convoluted stipulations to receive a free bet. At one time, you’d just have to put £20 on a game and you’d be given a free in-play bet, or similar offer. Now, there must be a goal by a certain player, or an unlikely event take place such as a big favourite losing, or a red card in an international friendly match. These measures attempt to give the allusion of getting one over on the bookies, but the chances of them ever being awarded are remote.
Whilst it’s too early to tell the long-term impact of the factors influencing the decline in free betting opportunities in the UK, it’s unlikely that we’ll see the kind of bonuses offered by unknown blackjack sites in 2005-10 again anytime soon. It’s also seems unlikely that taxing free bets is going to lead to greater revenue for the UK government. Much more probable is that numbers of new customers will begin to dwindle, having not been given a chance to develop an appreciation for betting and casino games. Whether that’s good or bad is moot. What’s important from the point of view of the legislators is not protecting the public from the “menace of online gambling” if that were the case, they’d simply ban it. For them, it’s a stream of revenue that was escaping the country. If that stream of revenue is as strong after being strangled by the recent slew of red tape, however, remains to be seen.