It’s not a secret that online gambling, and gambling in general, is a lucrative business. There are several entities involved in the gambling industry which are raking in cash hand over fist every year.
Anytime the topic of online gambling is broached, one market looms head and shoulders above the rest, the United Kingdom.
According to reports from Statista, the UK gambling industry generated a GGY (Gross Gambling Yield) of over $20 billion in 2019, up markedly from $10 billion in 2011. The dramatic uptick in UK gambling is largely attributed to the phenomenal growth of online gambling.
From the beginning, it should be noted that the UK is one of the world’s most progressive, inclusive, and forward-thinking online gambling markets. Players in the UK leave little doubt about it: they love their online gambling games.
UK online gambling legislation is overseen by the United Kingdom Gambling Commission (UKGC). This government body was created by the Gambling Act 2005 with the express purpose of regulating the UK commercial gambling industry.
This powerful body oversees the licensing and regulation of the National Lottery, as well as online casinos, online poker, online bingo, and online sports betting.
How Much Does the UK Make from Online Gambling?
Governments around the globe that have legalized gambling make billions of dollars every year from taxes on both online and offline gambling.
Some governments tax only the online casinos, while others take a bigger slice of the pie and tax the players as well.
The online gambling industry in the UK has reached its peak. Yet, there seems to be unlimited room for growth.
Players spend a lot of time and real money playing online games, such as the UK online roulette. Therefore, the fact that the UK government earned more than $3.8 billion in 2019 does not come as a surprise at all.
The UK government earns that much money by taxing domestic online casinos 15% on all of their profits. That might sound like a lot until you consider that the income tax in the UK is 20%.
Offshore online casinos are taxed the same way, which funnels even more money into the budget, as their numbers are much larger.
One way in which the UK government is not making money from online gambling is from players’ profits. You get to keep every single penny that you earn playing roulette, slots, or any other game.
The situation is not the same for players in the United States. For example, in Vegas, foreign punters will have to pay 30% of their wins in taxes, while domestic punters need to pay 25% of any win higher than $5,000.
How Profitable Is Online Gambling for UK Casinos?
The government has nearly no expenses when it comes to online casinos. They issue licenses and collect taxes. That’s about it.
On the other hand, it’s a completely different story for the online casinos. There are more expenses involved, so casino owners need to work hard to stay in the black. Regardless, it is estimated that an average online casino makes north of $500k each month.
There are several main drains in the online gambling industry.
First, they need to give 15% of their profits to the government in the UK. Next, they must pay software providers a fee for their games. Finally, their affiliate marketers have to receive a fair portion as well. After that, the casinos can keep anything that is left.
The main source of profit for online casinos is the return to the player. You can see this number in many casino games, such as the online slot machines. The average RTP on slot games is 96%, which means that online casinos earn 4%.
Therefore, the average casino will earn $4 of every $100 a player bets.
How Does the United Kingdom Compare to Other Online Gambling Markets?
If we use the 2018/2019 GGY of the UK online gambling industry as our base, the UK generated $11 billion in that time.
The United States generated significantly less than that at approximately $630 million over the same 2 year period. Regardless, the sheer value of online gambling in the UK continues to outpace all other markets in a big way.
According to a comprehensive study of the Online Gaming Industry, the total value of the global online gaming market in 2019 was $50 billion in gross gambling revenue, with a 10% compound annual growth rate over the past decade.
This far outstrips the growth of the land-based gambling market which is growing at a clip of 2% over the same period.
The online gambling market is dominated by European players, of which the UK makes up 15% of total online gross gambling revenue. Given that Europe comprises 26% of the entire $433 billion global gambling market and 54% of the total online gambling market, the UK’s contribution is significant. For online casino players, the logical question is why is the UK dominating this market?
How Much Do UK Players Gamble Online?
In September 2019 the BBC ran an article asking this question. The article suggested that online gambling dominated by leaps and bounds over arcades, betting, bingo, casinos, the national lottery, and other lotteries.
In fact, the figures provided by the United Kingdom Gambling Commission are unequivocal: UK players spend $7 billion on online gambling, accounting for nearly 40% of the total spent in the UK. Poker and online slots dominated, making up over 75% of the total.
In terms of sports betting at land-based shops, Britons spent $3.5 billion, while the UK National Lottery accounted for a smidgen under $3.9 billion during the same period.
In terms of gambling participation rates between 2015 – 2019, males are dominant, but females are increasingly interested in gambling. The UK Gambling Commission studied the habits of gamblers and found that the most active age group for gambling is the 25-34-year-old age group.
In this group of players, 40% have participated in some or other form of gambling activity within the past month. The majority of players polled in the survey indicated that they placed bets and played gambling games on PC, Mac, or mobile.
The UK also implements strict controls to prevent problem gambling (compulsive gambling) with tools and resources such as self-exclusion, access to healthcare resources, the National Gambling Helpline, cooling-off periods, and others.
The UK infrastructure is set up to encourage responsible gameplay, prevent abuse of the system, and to make it illegal for gambling adverts to target anyone under the age of 18.
The UK’s standards are perceived as benchmarks against which the global online gambling community can begin constructing their own infrastructures and systems.
Currently there are 37.6 million active online accounts operating at licensed operators across the UK. Furthermore, the UK boasts the largest number of fully licensed and regulated operators in the world at over 100 and growing, indicating a strong increase in revenues generated by UK-based operators.
The UK was among the first nations to recognize the sheer size and scope of online gambling and the financial windfall it can mean for the government.
Equally important is the size of the gambling industry. In 2018, some 100,000+ people were employed in the gambling industry in Britain. While that figure has declined to 95,829 people, it is still significant.
Online gambling activity requires much fewer resources, and it can have a huge impact on revenue generation. Many land-based operators have turned their focus to online gambling to drive up profits, increase their online footprint, and tap into new markets globally.
The comfort, convenience, and cost-effectiveness of online gambling in the UK is no secret. Players no longer need to trek to land-based bingo halls, lottery hubs, or casinos for their gambling fix. They can easily log in and play in a safe and convenient online environment.
Another huge positive of the online gambling industry in the UK is the perceived credibility of the industry. Due to a zero-tolerance policy towards underage gambling, a focus on transparency and fairness, and strict standards to which all operators must abide.
The culmination of the aforementioned leaves no doubt that the online gambling market in the UK is highly regarded in the world, and perceived as the pinnacle of excellence for all newly-regulated markets to follow.
It is against this backdrop that states like New Jersey, Delaware, Nevada, Pennsylvania, and others are measuring their own impact in this rapidly growing industry.
Gambling continues to thrive globally despite the many hindrances and restrictions from the governments and states.
Although the industry is growing in other parts of the world, growth is unassailable in the United Kingdom. With over 33.6 million active online accounts at all licensed operators, the UK can be said to be a home for the most online casinos in the world, with over 100 online casino sites with a UK Gambling license.
This statistic should tell you why Great Britain has such a high gross yield when it comes to gambling.
There is little to no doubt that the UK is leading the way for the online gambling industry.
Michael Stevens has been researching and writing topics involving the gambling industry for well over a decade now and is considered an expert on all things casino and sports betting. Michael has been writing for GamblingSites.org since early 2016. ...
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