Following the publication of its new report, Rachel Swann, commercial director at 3radical, a software company and the developer of the Voco gamification platform, details impacts of the most recent UKGC verification regulations.
The gambling industry is no stranger to regulation. In 2019 we have seen tighter guidelines and record fines as the industry has gone under the microscope. One piece of regulation that came into force in May 2019 exemplified the shifting landscape.
What was the regulation?
As of 7th May 2019, igaming operators have needed to verify a player before they can place a bet or access free-to-play games. The previous grace period of 72 hours no longer exists, and a full check needs to take place before a player can deposit or play.
Why was it needed?
This was an important move in the industry’s pursuit to limit the exposure of gambling to underage consumers. Operators are only too aware of their responsibility when it comes to player protection and this industry-wide barrier to play is a significant step in the right direction.
Verifying a player before they can open their wallets provides operators an opportunity to nip some problem gambling issues in the bud. Through increasingly unified self-exclusion processes and basic checks such as age, the industry is protecting vulnerable players at the earliest opportunity.
It also directly tackles notable (15 per cent of total) player complaints relating to the withdrawal of funds due to the verification process. This ruling puts the power into the players’ hands by simplifying the withdrawal process and improves pay-out speeds. Enabling operators to create a better customer experience through speedy withdrawals is generally welcomed by all parties.
Is regulation good for business?
Many operators have welcomed the new regulations as set out and enforced by the UK Gambling Commission – a properly regulated market that rewards good actors and weeds out those who don’t fall in-line is healthy for the industry.
On top of the deep social responsibility felt by operators with regards to player protection, it makes business sense, as explained in a 3radical report by director of BD at RISQ, Julian Borg-Barthet:
“One prominent CEO once told me, ‘If I look after my player, (s)he’s going to be betting with me for the next five years. If I don’t protect them, (s)he could gamble away their livelihood.’”
Regulation also opens up an opportunity for smaller operators. If you create a superior player experience with personalised offers, then you will retain players for longer and more safely. Kim Eaglestone, formerly of GVC Group, shares her thoughts on this in the report:
“Little operators segment properly and offer their players bespoke promos. For me, segmenting is about looking at how to retain your customers because at the end of the day, the games are the same from one platform to the next. So, what can you offer that’s different? If you have automated life cycles, you can see when a player is slowing down and then offer an info mailer or push a new game that’s coming out.”
So, why should affiliates care?
It is no surprise that many casino and sportsbook affiliates have seen changes in their UK performance. At the top of the funnel, the loss of the free-to-play games as content has impacted some affiliates much more than others. The specific impact is very much dependent on the marketing activity taking place and it is fair to say that it has disproportionately affected some affiliates in this channel.
Monetising good quality traffic once it has been sent to the operator has had its own challenges. Since the new rules in May 2019, affiliates across the industry reported a drop in their conversion rate from account creation to first time deposits
Affiliates whose deals are CPA (cost per acquisition) focused would have suffered the most and many deal-restructuring conversations were had!
All hail the hybrid
While conversion rates on new accounts created to first time deposits may not be overly favourable, players are more likely to stay loyal to a casino they are verified on. This loyalty is fuelled by an admin-free, quick pay-out times and a much deeper understanding on player behaviour.
If embraced by operators, the advancement of artificial intelligence will play a leading role in commanding loyalty from players.
Simon Collins, non-executive director at Gaming Realms explains:
“Good data collection and visualisation is imperative. Each firm should have a BI function and department, and that team should be responsible for looking at all the data points from RTP [real-time personalisation] through to user engagement.
“I think the use of AI in this area is very interesting. With the advancement in technology, we should be able to do a better job of segmenting our user base and getting access to really interesting user information. This allows us to reward people at the right time, and with the right incentive, to enable us to achieve the best results.”
So, why the hybrid reward model for affiliates? Media buying costs in the gambling space show no signs of getting more affordable and affiliates need to foot that bill upfront. Operators can support and enable this activity through paying a CPA upfront to quality affiliate partners with a further incentive placed on the lifetime value of the players.
The operator’s ability to retain a player through experience, entertainment and reward programmes is outside of the affiliates remit or capability to influence. This is where the trust and understanding between the two parties is going to get stronger in this new environment. Operators who can demonstrate their retention and value-adding tools will get the ear (and clicks) of the affiliates.
Sacrificing some short-term revenue and earning more per player over a lifetime is going to make commercial sense to most igaming affiliates. The uncertainty around the future of blanket welcome and reload offers, from both a regulation and marketing standpoint, will move the industry towards personalisation quicker than many would have previously expected.
This move is positive for the affiliates who adapt their models to the changing landscape of the industry and set their reward plans up accordingly!