The impact of the United Kingdom’s most recent gambling and tax legislation enacted under the Gambling Licensing and Advertising Act 2014 on mobile casino operators and their advertisers influenced how some partnerships are formed. In Q4FY14 it was there was some worry that new gambling legislation would reduce advertising monies spent on online and mobile gaming sites. Has there been a compromise in marketing business since?
Mobile and Online Casino Tariffs on Foreign Advertising
Foreign advertisers are the most affected. The new legislation mandates that foreign companies wishing to advertise on virtual casino sites in the interest of capturing UK customer business, must be licensed by the UK Gambling Commission. Operators may sell advertising space to foreign advertisers targeting the UK consumer market, providing they are licensed in European Union or the White List Territory. The 2014 Act also requires that operators pay 15 per cent on all gross profits derived from wagers placed by UK betters regardless of where the operation is based.
Recently Imposed Taxation Rules
Offshore relocation of remote gambling companies has been more of a consideration in response to the Act’s tax rules. Foreign jurisdictions are offering incentives to UK online and mobile casino companies to register their operations in nearby EU locations including the Cypress, Isle of Man and Gibraltar. At the moment, offshore gambling markets impose no to low tax on operations. Gibraltar taxes operators 1 per cent of profits at this time. Since 2014, gambling operators have been taxed based on place of consumption. Operators are obligated to pay tax at the rate of 15 per cent on all gross gaming revenues derived from UK betting wagers.
The Effects of Online Gambling Regulation
When the 2014 Act was first proposed as bill, market analysts predicted that the new laws would lead to a significant reduction in marketing on mobile gambling sites. In anticipation of the legal changes to mobile casino operations operators increased marketing expenditure prior to the end of the year. In 2015, the rules changes have changed how operators, and foreign advertisers are managing tariffs and taxes as part of their strategy to capture UK gambling consumer market shares. A general increase was noted.
Social Media and the Mobile Casino
Operators looking to capitalize on the accelerated growth of social marketing are generating profits with some of their own advertising. Posting of betting odds, predictions, and gaming tips, as well as live sporting event chat and post-game reviews, illustrates the power that social media sites offer casino operators investing time in continuous channel marketing as a tool for growing their businesses. The fact that social media offers such an exceptional level of return on marketing investment has enabled operators to skirt regulation under the rubric of social gambling. Companies such as Mobile Casino Party, Bet Fair, and William Hill have all demonstrated the effectiveness of social integration in market viability and player acquisition/retention.
The UK Government is in the process of monitoring the market for social gaming innovations, and associated products created by operators soliciting betting memberships to UK consumers to determine if there is indeed, any impact that should be subject to gambling tax in the future. Those sites conducting social gaming activities that offer real cash or prizes fall under current obligation to UK taxation.
Pay Per ‘Click’ Spending
Operators deploying their marketing strategies via on-demand, PPC (pay-per-click) spending are the most successful operators in Britain. With PPC an entirely new approach to digital casino advertising has been made possible. PPC is also more efficient, accounting only for real time usage and recorded plays converted from digital ad ‘clicks’. Casino operations are also finding channels for linking PPC advertising to the public through offline media placement, increasing rate of click-through and conversion per marketing unit spent. Promotions run through combined channel marketing campaigns are the most popular say operators, although companies must adhere to UK rules to free bets.
Mobile Sporting Event Placement
In the UK, sport betting remains a lead segment in the gaming market. British casino players are far more interested in sports than gambling. Ad campaigns connecting both sports promotions and casino gaming have the most potential in terms of generating profit. Marketers have done much to create content with event keywords such as The Grand National, The World Cup, or Wimbledon to ensure that they capture the most interest from fans.
Future Trends in UK Mobile Gambling
The advance of real money online and mobile casino gambling in the UK Going forward will require attention to operator incentives to retain those companies inside the jurisdiction. The future of online gambling is certain to demand that companies adopt new and innovative tactics; including marketing strategies that sidestep higher tax bills.
Digital casino operators obviously desire to increase profit through marketing. The 2014 Act reduced return on investment, both for operators and advertisers looking to do business in the UK. Social media is turning out to be the sure bet among other options, as operators shift their marketing strategy to a consumer-centric format in 2015. The traditional advertising relationship has been damaged by the recent legislation charging foreign advertisers higher tariffs for market participation. On-demand PPC has smoothed the way operators interested in saving on advertising campaign launch and the future financial success in 2015 is already underway.
