For many, looser regulations leading to lower rates of gambling harm may seem like a paradox. Aren’t stricter regulations more ethical? Prof. Andreas Ditsche, CEO of iGaming.com and professor of ethics, says otherwise.
Prof. Ditsche firmly believes that online gambling can be well-regulated, profitable, and ethical all at the same time. The key lies in collaboration between industry, regulators, academia, and players. However, the present reality is rather different, and such collaboration remains elusive.
In many countries worldwide, we’re observing overregulation in gambling. When all parties work independently without communication or cooperation, policies can become fragmented and overly restrictive, undermining the very goals of regulation. This results in loopholes, reduced player protection, and a thriving illegal sector.
Germany and the Real-Life Dangers of Overregulation
In recent years, Germany has become a notable example of the downsides of overregulation in gambling. The country has gradually introduced more and more restrictions and limits to halt addictions and provide a safe environment for players. These include, but are not limited to:
Monthly deposit limit of 1,000€ across all licensed casinos
A maximum limit of 1€ on each spin in online slots
Ban on live dealer games and progressive jackpots
Restrictions on in-play betting options for sports
Once you factor in the substantial 5.3% turnover tax on every stake placed online and the restrictions on advertising, the situation gets even more complex. The effects, on the other hand, are apparent and not at all what the German regulator intended.
Overregulation has made the legal gambling market unappealing and has pushed players to unlicensed platforms with more attractive offers. The latest official data puts Germany’s channelisation rate at less than 50% (40% for slots) meaning that about half of the gambling population has been lost to the black market.
Moreover, according to analysis carried out by Prof. Dr. Ditsche’s team at iGaming.com, only 23% of German players search for legal keywords. The rest look for illegal and casino-related terms and phrases, which are strictly prohibited by the Gemeinsame Glücksspielbehörde der Länder (GGL).
Image title:
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A pie chart showing keyword search breakdown in Germany
Another factor that’s shaping the current reality in Germany is the way gambling is perceived by the public. Years of overregulation and negative, fear-based rhetoric have made such activities almost taboo, something no one speaks about. And by not speaking about an issue, you don’t make it go away, you simply sweep it under the carpet.
“Looser” Regulations Show Better Outcomes
In contrast, countries with a more relaxed approach to gambling, both in terms of regulation and social perceptions, show better results. According to national statistics from Spain, about 80% of the population has gambled in the last 12 months. Compared to Germany, channelisation rates in the country are higher, and addiction rates are lower.
Nordic countries like Denmark, Finland, and Norway are also good examples of how more balanced gambling policies could have a positive effect on the industry. Denmark, particularly, has reported a channelisation rate of 90% which is impressive. This is a win-win situation with more tax money for the country and better protection for players.
So far, the UK also remains a good example. The Gambling Commission has managed to strike just the right balance. Official data puts channelisation rate at over 90%. And when regulators are not preoccupied with fighting the black market, they can spend time and resources reinforcing player protection policies.
In the last couple of years, the UK Gambling Commission has introduced new restrictions and limits for online gambling. This includes a £5 stake limit on slots for players aged 25 and over, and £2 for those between 18 and 24 years old, and a ban on autoplay.
We trust that the regulator knows where to draw the line to avoid making the legal market less attractive, driving players away, and losing revenue opportunity to offshore gambling. Overreach in regulation and its potentially harmful consequences must be avoided.
Affiliate Marketing & Player Protection
Having direct experience as CEO of an iGaming affiliate, Prof. Dr. Ditsche points to another dilemma – the one between revenue generation and responsibility. He argues that for any business to achieve long-term, sustainable success, there should be a balance between the two.
Promoting only licensed operators may reduce profits in the short term, but it’ll also create trust among players, which is an extremely valuable asset. Additionally, it’s affiliates’ responsibility to protect players and contribute to a safe online gambling environment. They can do this in many ways.
Some affiliates like iGaming.com, for example, share responsible gambling tools and resources, including self-assessment tests and actionable insights into how to set deposit and time limits, how to self-exclude from gambling, and more. They have a comprehensive guide to responsible gambling organisations worldwide.
Another thing that gambling affiliate businesses in the UK and anywhere else must do is stick to responsible marketing practices. They should be a trusted point of reference for players, without overhyping online casinos and making things look more glamorous than they really are.
And here’s where it gets complicated in the example of Germany. If only 23% of the searches are for legal keywords, what’s the next step for affiliates? If acting alone, what could they possibly do to bring the rest of the players back from unregulated platforms?
A transparent collaboration between affiliates, operators, policymakers, and regulators could make this easier and more feasible. All parties must put their differences aside and work together towards achieving their common goal – a sustainable legal gambling market.
Key Takeaways for the UK Gambling Sector
Based on cross-country comparison, we can draw a few conclusions and takeaways for UK businesses:
An ethical, well-regulated gambling market is achievable. It takes cooperation between all parties involved to achieve it.
Overregulation is counterproductive. It drives players to unregulated platforms and makes them more vulnerable.
iGaming affiliates must hold their ground and stick to promoting only licensed and safe platforms.
In today’s complex gambling landscape, responsible gambling and player protection should be a priority.
The next challenge for UK gambling businesses and every other business in general, is effective AI implementation.
With a channelisation rate of over 90%, for now, the UK gambling industry is among the good examples of balancing an ethical approach and reasonable regulations.
