As the second largest online gambling market in the world (after only the U.S.), as well as one of the few markets in which online gambling is legal, taxed and regulated, the U.K. online gambling industry represents a significant growth opportunity for casino affiliates. In this article, we’ll look at recent industry trends, as well as how you can market to and profit from online gambling in the U.K.
Last March, CAP noted that business within the U.K.’s online gambling market has been strong recently, with many of the country’s biggest gambling providers posting significant revenue gains over their 2009 balance sheets. Gambling titan William Hill reported,
“’Britain’s biggest bookmaker by market value,’ per Reuters, has reported full year operating profits for the year to December 29 rose by 7 percent to £276.8 million, or $446.1 million.”
Other key operators in the U.K.’s online gambling space – including Ladbrokes and Unibet – reported similarly positive returns, indicating that there will continue to be potential in this market for some time to come.
New Opportunities
So for casino affiliates who are interested in entering the U.K. market – especially in light of the increasing crackdown on U.S. gambling sites – what specific areas of opportunity exist?
Interestingly enough, although gambling in the U.K. has traditionally been driven by the elderly and those on lower household incomes, the demographics of U.K.-based online gamblers appears to be changing. Consider the following statistics about the rise of new types of gamblers in the U.K.:
- Almost half of the U.K.’s online gamblers “earn more than £30,000 ($49,717)” annually
- 46 percent of online gamblers are women, and
- Middle-aged men, the well-educated and high-earning households have driven the phenomenal growth in this market over the last two years
Additionally, the article shares that online poker is the favored game amongst U.K. gamblers, with the popular PartyPoker.com website experiencing a 174% increase in site visits over the past year.’
When considered together, these statistics reveal some interesting opportunities for online casino affiliates. For example, poker-specific sites that cater exclusively to women or to business professionals could provide a welcome change from sites that target the elderly or those from low income households. As these and other new demographics flock to internet gambling, sites that provide a solid introduction as well as relevant product placements could prosper as well.
Potential Threats
However, despite all of the potential surrounding online gambling in the U.K., there is one essential concern that affiliates must keep in mind – the potential introduction of new taxes that threaten to eat away at their profits.
Largely as a result of the U.S.’s increased scrutiny of online gambling, the U.K. government is currently overhauling its online gambling legislation and regulations. John Penrose, the U.K.’s Gambling Policy Minister, has indicated that he will press for additional taxation, based on the “location of consumption” – meaning that any affiliates who target U.K. users could be on the hook for the country’s 15 percent gross profits tax, regardless of where they’re located.
For casino affiliates, this move could be devastating – especially for U.K. expats or others who target the U.K. market from remote locations. Additional taxes would reduce affiliate profit margins, making it more difficult to succeed in this currently-lucrative market.
Where to Go From Here
Since it will still be several years before these details are finalized and the new restrictions are implemented, there’s still hope that these new taxes can be reversed. If you live in the U.K., CAP recommends contacting your representative and letting him or her know that you oppose changes to the tax code that place an undue burden on casino affiliates.
Are you currently targeting the U.K. market? If so, are you concerned about the impact of these proposed tax increases? Share your opinion in the CAP Forums!