Analysis of DCMS Consultation on online slots stake limits

Introduction

On 26 July 2023, the Department for Digital, Culture, Media & Sport (DCMS) published their first consultation from the White Paper outlining proposals for the introduction of a maximum stake limit for online slots games in Great Britain.

Here we take a look at the details of the consultation and the options put forward.

This is the third piece of analysis in our series focusing on the White Paper proposals. The first one being the Analysis of the recent DCMS consultation on land-based gambling and the second the Analysis of the Gambling Commission’s consultation on changes to the LCCP, RTS and regulatory panel arrangements

Background and Rationale

The consultation document highlights that despite relatively low participation rates (the Gambling Commission’s quarterly data indicates that fewer than 1% of adults played online casino games, including slots, in the month preceding the survey), online slots are a substantial contributor to operator profits. In the 2021/2022 financial year, online slots contributed over £3 billion to the industry’s Gross Gambling Yield (GGY), surpassing the combined GGY from online sports betting and online bingo.

Online slots are also linked to factors that elevate gambling-related harm risks including prolonged gaming sessions exceeding three hours, binge gambling and are commonly used by players who seek support from the National Gambling Treatment Service.

Given these findings, the DCMS is concerned that online slots are associated with some of the highest average customer losses across gambling products and proposes to take action to address the risk of high potential losses in a short time span.

DCMS’s intention is to introduce a maximum stake limit for online slots that would curtail the intensity of gambling and prevent players from accumulating substantial losses in a short amount of time, whilst still facilitating recreational play.

The Options

The options put forward in the consultation for a maximum stake limit applying to all adults are:

Option 1 – A maximum online slots stake limit of £2 per spin

The £2 limit is the most stringent option proposed and would have the most pronounced effects on gambling businesses and consumers.

Although approximately 97% of individual online slot stakes are already below £2, data from industry operators reveals that up to 35% of online slot players wager over £2 on at least one spin annually, with wagers over £2 currently contribute an estimated 18% of the total GGY from slots.

This option would bring the stake limits for online slots in line with those applicable to B3 gaming machines in land-based gambling venues. However, it is worth noting that gaming machines come with wider monitoring and player intervention requirements.

Option 2 – A maximum online slots stake limit of £5 per spin

This proposal would align with the stake limit applied to B1 gaming machines in casinos — the highest limit currently allowed for any land-based gaming machine.

Online slots stakes exceeding £5 account for slightly over 0.5% of all staking events but contribute approximately 7.4% of total GGY generated by slots. Operators report varying statistics, indicating that between 8% and 23% of players currently wager over £5 on at least one spin annually.

This would obviously have less of an impact on businesses and consumers than the £2 stake limit, but the potential should not be underestimated.

Option 3 – A maximum online slots stake limit of £10 per spin

The DCMS is considering this higher limit option due to the distinctive features of account-based play online and the associated player protections that are not easily replicated in land-based gambling venues.

Aligning online slot stake limits with land-based gaming machines under options 1 or 2 may be a neat solution on the face of it, but the inherent differences in player monitoring capabilities between online and land-based gambling may be a compelling argument for a higher stake limit for online slots.

The majority of slots players will rarely stake at £10 or above annually, thus minimizing the disruption to their playing habits. According to DCMS data, stakes exceeding £10 contribute to approximately 2.6% of the total GGY generated by slots.

Option 4 – A maximum online slots stake limit of £15 per spin

The £15 limit is the highest figure being consulted on and would result in minimal changes from current player behaviour and the least impact on operator GGY (stakes exceeding £15 constitute only 0.05% of all staking events on online slots and contribute approximately 2% of the total GGY).

The consultation document highlights that although high stakes themselves may not inherently lead to harm, there is a notable overrepresentation of high-risk customers among high-staking players in the data.

It seems unlikely that this option will be adopted in light of DCMS’s stated rationale for the introduction of stake limits and the minimal impact highlighted in the consultation document.

18 to 24 Year Olds: Protecting Young Adults Using Online Slots

The White Paper identified that young adults (18 to 24) might be a particularly vulnerable group and, as expected, the consultation proposes separate maximum online slots stakes for this age group on that basis.

The consultation refers to the Public Health England Gambling-related harms evidence which states that problem gambling rates are highest in the 16 to 24 age group (1.5%). The consultation also cites the Gambling Commission’s formal advice to the review which identified several factors in the importance of young adulthood in forming gambling behaviours such as ongoing cognitive development until age 25, alongside typical life-stage shifts like transitioning support networks and gaining initial experience in managing finances.

On this basis, alongside the product specific risks identified for all ages, the DCMS considers that there is a strong case for slot-specific measures for this age group.

Although evidence suggests the average stake size for 18 to 24 year olds is lower, comprehensive data on their slot engagement is lacking which has prompted a data request to the industry alongside this consultation.

Additional online protections for young adults – particularly stricter financial risk checks – are proposed to be addresses in updated guidance on remote customer interaction to be published shortly by the Gambling Commission.

The options proposed for 18 to 24 year olds are:

Option A – a maximum online slots stake limit of £2 per spin for 18 to 24 year olds

Implementing a £2 limit for this age group would be less disruptive than if it were a general limit as the DCMS’s evidence indicates that 18 to 24 year olds tend to wager less compared to other age groups. Nonetheless, this would be the most disruptive among the options being considered.

Option B – a maximum online slots stake limit of £4 per spin for 18 to 24 year olds

This option represents a higher limit that the £2 on B2/B3 gaming machines, with the rationale being that additional safeguards in online play, including lower financial risk checks, could provide better protection than anonymous land-based play. However, this is still lower than the £5 limit on B3 machines in land-based casinos available to anyone over 18 years of age.

Option C – Applying the same maximum stake limit to all adults, but building on wider requirements for operators to consider age as a risk factor for gambling-related harm

This is the least disruptive option for operators and their customers and is based on the principle that operators should have regard to a customer’s age when considering vulnerabilities, and limiting customers who are deemed at risk to lower stakes on certain products is already within the measures at an operator’s disposal.

Responding

The consultation will be open for responses until 11:55pm on 20 September 2023.

Responses can be submitted through the DCMS’s online survey here or via email to gamblingactreview@dcms.gov.uk.

This is an opportunity for all licensees to shape constructive improvements to industry regulation while mitigating potential harm to their businesses. Operators and industry stakeholders are encouraged to assess the implications of the options and assist the DCMS with evidence-based responses.