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A newly released study of gambling spending in the UK uses real-world data to affirm the thesis that online gambling, especially racing, depends heavily on a small percentage of players.
It also suggests that restricting deposits and spending in the way several European countries have done will be painful for the industry, and outlines the challenge for UK-focused operators seeking to prove their biggest customers can afford their gambling habit.
“All such measures would pose an existential threat to regulated operators if a high proportion of their revenue would be curtailed by hard limits or if high-spending players migrated to the unregulated sector,” the authors wrote.
The study by David Forrest and Ian McHale of the University of Liverpool was on June 24 in the Journal of Gambling Studies.
The so-called Pareto Principle suggests that, in many businesses, 20 percent of customers generate 80 percent of revenue.
But this study found that the top 10 percent of UK online gamblers supplied 79 percent of revenue, and the top 5 percent, just over two-thirds.
The top 1 percent of spenders, who staked more than £70,000 in the year studied, generated about 37 percent of revenue, according to the report.
The study supports the thesis that horseracing would be heavily affected if deposits or losses were restricted.
The top 1 percent of racing spenders were only 60,000 bettors, but they lost on average £4,200 per year and generated 52 percent of revenue for gambling operators.
The Racing Post publication spearheaded a campaign that led to a debate in parliament over affordability checks.
It claimed the checks have been intrusive, a contention disputed by the Gambling Commission.
The UK sectors least dependent on high-rollers were online bingo and sports betting.
Still, the top 0.5 percent of bingo spenders — those who spent more than £6,740 that year — generated nearly 27 percent of revenue.
So even online bingo would be affected by deposit and spending limits being imposed in some markets, the researchers said.
Because of the stigma associated with gambling, the online industry has limited tools to address the problem of over-concentration, the authors write.
Marketing more heavily to light or non-spenders might attract regulatory attention, the professors said.
A strategy used by the alcohol industry, attracting customers to premium products, would be challenging to implement in gambling, with so many products “homogenous”, the researchers said.
Since 2020, some of the largest operators have claimed success in attracting more “recreational” players, but Gambling Commission data suggests that strategy has cost the industry revenue, the academics write.
“From the extremely low contribution to revenue of light users” demonstrated in the 2018-19 data, “it seems unlikely that revenue from this group can replace that foregone from the heaviest users to any meaningful extent”, according to the study.
In the US, the industry’s dependence on VIP players has grown more controversial in recent months, with publicity about high-rollers with potentially risky spending habits seeming to generate an undue portion of revenue.
In Sweden, trade groups claim that tightening regulations have pushed big spenders to the illegal market, while in Germany, with possibly Europe’s tightest regulations, online slots and casino revenue have actually declined since online gambling legalisation.
According to the UK study, the average sports bettor spent £135 over the year; the average online casino player, £296; and gamblers doing both spent £602.
To be in the top 20 percent, gamblers needed to spend £1,390 per year. Sports bettors lost an average of 8.7 percent on stakes, while online casino gamblers lost 4.2 percent.
Those averages suggest that the heaviest online gamblers lost a few thousand pounds a year, the academics said.
That operators depend heavily on big spenders is important because previous research suggests that high spending correlates strongly with gambling harm, the professors wrote.
In Finland, Veikkaus and Paf have introduced spending limits, and countries including Germany, Belgium and Spain have deposit limits, while soon the Netherlands will impose mandatory affordability checks with deposits above a certain level.
Many previous studies used self-reported surveys but this one collected a year’s worth of data from 140,000 accounts playing with seven different operators representing nearly 86 percent of online betting and 38 percent of all online gambling, according to the researchers.
The report, perhaps the biggest-ever multi-operator database made available to researchers, covered the 12 months up to June 30, 2019.
