Why Are Punters Looking Abroad For Their Online Betting Needs?

Author Image Article By Joe Short GDC - Icon - Black - Info
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Why Are Punters Looking Abroad For Their Online Betting Needs?
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The number of online gamblers using VPNs to avoid geo-restrictions is on the rise and we investigate why

UK gambling firms have been warned to get their act together if they are to maintain their core customers in an ever-evolving market.

Betting online has never been easier in the UK – so far as technology is concerned. Assuming you’re not living in the last century you’ve almost certainly got a smartphone to hand and a broadband connection on your computer.

Once Covid-19 subsides, Britain is set to roll out a new 5G network to further empower people’s connectivity. And with that comes even greater opportunities to bet online via a wide range of gambling sites and apps.

The Gambling Commission found over 37% of UK gambling activity now comes from remote betting – largely through online browsers or apps. Being able to bet without the need of a desktop computer or adhering to your nearest betting shop’s opening times has revolutionised gambling, be it in sportsbooks or online casinos.

Yet despite the boom in betting apps appearing on the domestic market over the past decade, warning signs are beginning to show for the UK gambling sector.

Warning Signs

Last year proved a noticeable landmark for British gambling, with Gambling Commission figures showing remote gambling revenues declining for the first time – from £5.6bn to £5.3bn. Granted, those are still healthy figures for the industry, but company heads will have noted the decline and won’t want it to continue.

The revenue fall came about thanks to a number of factors, such as higher taxes, changes to regulation and an increase in media coverage over the harmful effects of problem gambling, such as the regulation change on fixed-odds betting terminals.

Best Betting Sites

Indeed, the UK’s major betting firms – William Hill, Bet365, Coral Ladbrokes and Paddy Power – pledged to increase their levy paid to Gambling Commission to help problem gamblers to £100m year – a full £30m more than requested.

But while taxes, legislation and problem gambling may headline the issues UK and European firms face, another factor gambling companies should be looking out for is punters fleeing domestic markets for more attractive propositions abroad.

More Punters Betting Abroad

That is the warning from Zac Cohen, COO of Trulioo, which provides ID verification solutions to gambling operators across the world and who recently commissioned the Online Gaming and Account Opening Report 2020 to reveal 11% of UK/European customers have opened a US-based account. A further 17% are planning to open one.

“There is a massive opportunity for online gaming operators globally, and the timing is critical for them to gain market share,” Zac tells Gambling.com.

“Many of today’s consumers have an international mindset and no longer feel restricted to the borders of a market or country as reported in the survey – 44% of online gamer respondents have created accounts on an online gaming site hosted outside their own country in the past two years.”

Evolution of Remote Gambling

The gambling sector has boomed since online gaming and betting took off in the 2000s. Texas Hold’em was one of the most popular games downloaded within the first five hours of Apple launching its App Store.

Over the past decade, as smartphones spread across the population, mobile gaming app revenue worldwide leapt from $34.8bn in 2015 to a projected $74.6bn this year. Had the USA not banned online gambling in 2006, the global industry would almost certainly be far larger today.

With the accessibility of smartphones came a trigger for British gambling firms to perfect their products and launch innovative sportsbooks and casinos to a remote market. This is still happening today.

responsibleApple facilitated the rise of mobile gambling through the revolutionary App Store

In-play sports betting, live streaming, live casino games and immersive slot machines have developed over the years to provide punters with a full suite of attractive betting options across numerous sites, all of which can be accessed away from your desktop or a betting shop.

And the market is always changing. In a world that is becoming increasingly small thanks to technology, UK firms are at even greater risk of competition from abroad. And as punters shift their allegiances outside the domestic market, UK betting companies should be looking to follow.

A Global Market

So why are punters seeking to bet abroad? Well, it’s not necessarily the ability to bet outside a country’s jurisdiction that is attracting players. Just as you can buy clothes from the other side of the world, have food delivered from an unlimited choice of restaurants and watch TV produced by foreign networks at the click of a button, choice in online betting is the driving factor.

“Generally speaking, online gamers are looking to engage with operators outside of their own country if they provide quicker, less intrusive opening processes and better security,” Zac tells us.

“Additionally, punters are always looking for new games of chance and new gaming experiences; the biggest factor for opening accounts outside of the country of residence is more choice of games (48%).”

Yet with this push for further choice comes an issue for the consumer.

“This desire for new gaming opportunities often overrules the desire for security or legality,” adds Zac. “While players themselves rarely run into legal issues with offshore gaming, depending on the jurisdiction it can be unlawful or a grey area. If issues do arise, these players have little legal recourse.

"Providing access to new games in a protected and secure environment is a better way for the industry to generate revenue while protecting interests.”

Looking Towards America

Indeed, secure gambling is set to earn much greater focus in the years to come as the United States opens up its regulations to remote gambling and sports betting. All eyes right now are on America – a remote gambling industry that in 2018 was worth $13bn is predicted to hit $149bn by 2023.

A handful of EU and European companies – namely William Hill and 888 – have managed to gain a foothold in the US market. Indeed, such is the interest in sportsbook betting on both sides of the Atlantic – with particular focus on NFL – more firms are expected to follow.

But security is likely to be scrutinised even more as governments at national and local level invest increased resources into the harmful effects of problem gambling. Striking a suitable balance for both industry and regulation may take time, especially in a country like America that has outlawed online gambling for so long.

Mobile Poker Sites

And yet, the attractiveness of expanding markets will always be of interest to big firms, no matter the regulatory hoops required to jump through.

“The math is simple – more than half of online gamers have opened three or more accounts in the past two years, and 59% expect to have a greater number of accounts in 12 months,” says Zac. “Hence the opportunities to acquire a new customer base are endless for gaming operators that can offer a safe, seamless and speedy account opening process.”

With new gaming opportunities being the core push for players, gambling firms are naturally inclined to create more diverse and entertaining products. All the while, legislation and social attitudes towards gambling check these balances.

Punters Escape Geo-Blocks At Their Own Risk

This leads to the issues UK firms have on players creating offshore accounts. How easy it is to set up foreign betting profiles remains tricky to gauge. America’s online gambling industry is emerging at a state-by-state pace, with individual states providing their own jurisdiction on punter locations.

Yet the worry remains that the global industry is lagging behind technology, with many punters using VPNs to circumnavigate geo-blocking technologies.

And punters seem happy to do this despite the legal issues and lack of protection involved.

“While geo-blocking technology is becoming increasingly sophisticated, there is a strong indication that punters are actively finding ways to bypass it to place bets on offshore sites,” says Zac.

responsiblePunters and technology experts are battling for supremacy in the world of geo-blocking

“So far, VPNs seem to be the way that they’re attempting to circumvent geo-blocking technology, since they allow punters to get around and play in websites that they normally wouldn’t be allowed to access based on their local online gambling laws.

“It’s worth noting though that any time a punter goes with an offshore betting operation, they lose all legal recourse. While there are some offshore operators that are interested in building a long-term reputable brand, it's often not easy to distinguish the good operators from the bad. Without doing their own due diligence, which the average player does not want to do, it's safest for them to play within their own jurisdiction or play with larger, well-known gaming brands.”

Scour The World For The Best Product

So, with geo-blocking technologies easy to override, there appears no limit to how far punters will look to find their preferred gambling sites and apps. Pressure on UK and European firms to compete against other emerging markets – whether it be the US or elsewhere – is growing by the year.

Expansion while protecting your core customers seems to be the obvious path.

“Regardless of where the online gaming operator is based, customers are looking for world-class customer experience,” says Zac.

“Even though the Trulioo report only surveyed the UK and US markets, it’s clear that consumers all over the globe are unsatisfied with their experiences. Businesses that have the ability to customise their website, onboarding process and payment methods will eventually attract more consumers, whether they be in the UK, China or Brazil. Right now, however, the online gaming industry still has a way to go before it can genuinely claim to offer first-class digital onboarding experiences to gamers.”

Can Domestic Firms React Quick Enough?

How UK and European firms will fare in the future remains to be seen. Many are seeing drops in their shop revenues as punters turn towards remote gaming – especially younger generations. Betting shops are now at risk of becoming obsolete.

Meanwhile, online products such as live casinos, worldwide poker tournaments and in-play sports betting are now all available through phone apps. Future progress in the industry could depend on the success of companies who create mobile products that adhere to varying regulations while also offering the range of betting options, security and safety that punters desire.

Consolidation in the industry could also continue. Over the past five years we have seen a number of European firms merge. Ladbrokes and Coral merged in 2016 only to be bought by GVC two years later. Paddy Power and Betfair joined forces in 2016, while William Hill and 888 have both acquired smaller companies in recent times. With greater business share comes heftier market influence and lobbying power.

We have seen through the Gambling Commission voluntary levy increase that firms are keen to stay the right side of both the law and of social perception. Expansion therefore comes with responsibility.

As for whether or not offshore gambling could aid money laundering activity, Zac insists betting firms must be vigilant and maintain their commitment to unearthing and eradicating the practice.

“Ultimately, the gaming industry is one that is under increasing pressure to ensure that their operations are not infiltrated by funds from money laundering. For example, in the European Union, the 5th Anti-Money Laundering Directive (5AMLD) has come into effect, requiring gaming operators to deploy AML procedures. In the US, the last four years have seen $110m in AML-related fines and with the expansion of the sports betting market there, that number could rise significantly.

“Beyond regulatory requirements, enabling money laundering damages the reputation of the industry and could turn public sentiment against new gaming opportunities. It's imperative that operators establish clear and effective procedures to stop illegal funds from entering their systems to ensure that they can present themselves as fair and honest businesses.”

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Joe Short

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