A new research study estimates that black market betting firms will be spending as much as £1 billion on advertising in the UK by 2028 – more than the regulated sector.
The findings, collated by the World Advertising Research Center (WARC), revealed that by October of this year, the total amount spend by gambling operators on promotional activity will reach £1.9 billion.
Of that, £845 million will be forked out by illegal firms – an annual increase of some 32%.
And then, by 2028, black market brands will be spending more than £1 billion on advertising… while legitimate operators, due to mounting cost pressures, will have reduced their own spend to a figure lower than that.
Tectonic Shift
Marketing budgets are likely to be one of the areas most impacted by the gambling tax increases, which are set to be phased in as of May.
Betting firms will be making less money than before, so cutbacks – which include promotional activities and even shop closures – are inevitable.
One leading firm has already confirmed they will cease all horse racing sponsorships going forward, while Coral has ended their 51-year association with the Cheltenham Festival by ceasing their sponsorship of the race formerly known as the Coral Cup.
“The significant change in the taxation landscape for betting operators means we need to drive even more value out of the events we sponsor, and review with even greater scrutiny where we invest our marketing spend,” said Coral’s director of PR, Simon Clare.
So as the legal sector begins to cut back on their ad spending, it’s the black market that will seemingly benefit the most.
That has been confirmed by the independent study undertaken by WARC, who found that ‘almost all growth now being driven by unlicensed firms.’
Describing the situation as a ‘tectonic shift’ for the industry, the report continues: “These operators are predominately based overseas and are paying ever-increasing amounts to reach UK consumers online via search and social media.
“Sponsorship too is heavily leveraged by unregulated firms who are, collectively, set to account for over more than half of sponsorship ad spend in the gambling sector next year.”
The study was published just hours before MPs met in the House of Commons to discuss the future of gambling advertising in the UK.
And ahead of that session in the chambers, Betting and Gaming Council chief Grainne Hurst warned that Westminster should be aware of the ‘alarm bells’ being sounded by the latest research findings.
“WARC’s analysis shows digital channels now dominate gambling advertising, with search and online display accounting for the largest share of spend,” Hurst commented.
“Online and social media are more likely to reach under-18s than traditional broadcast media, making those protections harder to apply in practice.”
After the Watershed
MPs met on Westminster Hall on Thursday to debate the future of gambling advertising in the UK.
Members of the Gambling Reform All Party Parliamentary Group (APPG) claimed that the current regulation governing promotional activity amongst betting firms was ‘no longer fit for purpose’.
Some ministers have called for a blanket ban on ads promoting betting companies from being displayed before the 9pm watershed.
There were also calls for a complete prohibition on gambling advertising in sport, although MPs did suggest that a ‘carve out’ for horse racing and greyhound racing would be allowed as they were, typically, not that well-attended by children.
There are increasing concerns that minors are being exposed to gambling ads, with only ‘partial measures’, such as voluntary codes of conduct, gatekeeping children from promotional activity on television, radio and social media.
The Labour MP and APPG chair, Alex Ballinger, used the example of the whistle-to-whistle ban on TV ads during live games to show how rules are being circumnavigated.
“Research shows that thousands of gambling messages still appear during matches through pitch-side advertising, sponsorship and branding that falls entirely outside the scope of the ban.
“We cannot allow this level of exposure to continue unchecked. Protecting children must come first, and that means taking decisive action to reduce the scale and reach of gambling advertising.”
The 9pm watershed was instituted back in the 1960s to prevent children from consuming content that is deemed ‘unsuitable’. The ban relates to free-to-air television, with some subscription channels able to implement an 8pm watershed.
In January of this year, the government approved a motion that sees junk food ads banned before the watershed. Ministers now want to see gambling adverts treated in the same way.