Why No Deposit Bonuses Failed in the UK
Online casinos have been around since the mid-1990s and no deposit bonuses in the UK were successful marketing campaigns for operators and very popular among the players right up until about 2017. Around that time, the competition among online casinos and sportsbooks began to really heat up and both deposit and no deposit marketing campaigns became fierce to encourage new player registration as well as ongoing brand loyalty. It wasn't only the competition that had an impact on the failure of UK no deposit bonuses and, in this article, we will uncover a number of factors that played a significant role, including changes to advertising laws, constant research publications of the impact of online gambling in the United Kingdom, and the aggressive stance of the UK Gambling Commission to protect minors and ensure responsible gambling was at the forefront of all marketing efforts in the industry.New changes are being implemented in the UK and there are several reasons behind them including the growth in problem gambling, lack of customer satisfaction, and increased government regulation. Before we delve into this here at No Deposit Wow, let's first look at the growth of no deposit bonuses in the UK gambling industry.
UK Casino Bonuses and Their Growth
When online casinos were first launched bonuses were not commonplace and the only types of bonuses players would find were through VIP club and minimum bet offers. As more and more casinos launched, operators were forced to come up with attractive bonuses to attract players and these marketing incentives thrived.
The types of gambling bonuses being offered to players in the UK is constantly changing. This is in part due to the rise in competition and also due to regulation changes. When casino bonuses were first introduced back in the late 90s, they were small and consisted of deposit match offers, followed by free spins and loyalty rewards. As the online gambling industry grew, so did the competition, and online casinos wanted to secure players by offering them more options. These included multi-tier match bonuses offering more bonus money to play with. These were followed by no deposit bonuses like free play, free cash, and then no deposit free spins. The no deposit bonus was mimicked by online sportsbook who offered free bets to new signups and they were a huge success as more and more bookies took their business online.
In today's online gambling climate, the UK Gambling Commission is starting to put pressure on how things are regulated and how bonuses are advertised and because of this, we are seeing a decline in no deposit bonuses. Why did this happen?
The UK Online Gambling Marketplace
Up until a few years ago, the UK marketplace was extremely popular with online casino operators and there were three main reasons for this.
- There was a huge demand for online casinos.
- The trade terms were extremely advantageous and resulted in TV and radio advertisements that brought in huge numbers of players and big revenues.
- Several large offshore operators saw the advantages of being in the UK marketplace and began buying up small UK based casinos. Big brands like Leo Vegas claimed a large piece of the gambling market early on.
Unfortunately for casino operators, the UK Gambling Commission placed restrictions on this very lucrative market and their strict policies were soon adapted and used in gambling regulations around the world. This was mainly due to the number of negative studies released over the years on the impact of online gambling in the UK. These included studies such as:
- The British Gambling Prevalence Survey looks at participation in all forms of gambling and estimates the level of problem gambling in the UK. Since 2007 it has provided this information and saw an increase in women gambling from 65% in 2007 to 71% in 2010. In 2010 3.5 million adults were showing signs of difficulties with their gambling.
- The Scottish Centre for Social Research published a report by Dr Gerda Reith, University of Glasgow on Research on the Social Impacts of Gambling in 2006.
- A survey commissioned by the GambleAware charity YouGov estimated that 2.7% of adults in the UK, nearly 1.4 million people, were problem gamblers.
- A special report on Gambling Addiction in the UK by Dr Mark Griffiths, Professor of Gambling Studies, International Gaming Research Unit, Division of Psychology Nottingham Trent University found evidence that gambling contributes to high levels of family breakdown and is closely linked to other addictions such as alcohol and drugs.
- A House of Lords report in July 2020 titled Gambling Harm - Time for Action.
- In December 2019, professor Jim Orford published a report on the dangerous features of modern online sports betting and cited papers that appeared in the International Journal of Mental Health and Addition that analyzed the betting behaviour data from 19 Unibet customers and found that in-play live betting features are dangerous for problem gambling.
The UK Gambling Commission and Increasing Restrictions
The UK Gambling Commission is the government body responsible for overseeing and regulating all the legal gambling activities within the United Kingdom. It was formed in 2005 after the Gambling Act of 2005 was passed. They have become a prominent and well-respected regulatory authority throughout Europe and the rest of the world. The goal of the UKGC was to protect players and make gambling both safer and fairer in the UK. They took swift action based on the negative research studies that were being reported on problem gambling and implemented the following regulations which all UK online casinos must adhere to. The same rules apply to any offshore casino looking to get a license.
- Tighter verification measures must be in place to prevent underage gambling. All operators are required to get verification from players who must prove their age before they can receive any bonuses or free play offers. This is to ensure children are protected and to prevent money laundering or any other illicit activities.
- New marketing compliance requirements were also introduced in a big to prevent misleading messages. All UK licensed online casinos must now clearly display all the significant terms and wagering conditions on their bonus offers.
- A ban on the use of terms like "no deposit free spins" or "no deposit bonus spins" was enforced.
Other gambling laws were also passed including the implementation of higher taxes on online casinos operating in the UK. This led to a lot of negative attention as well as decreased revenues which in turn led a lot of operators to pull out of the UK market. Those that chose to stay found a way to adapt and sites like PlayOJO and BGO which were marketed as wager-free casinos began popping up. For a while, no deposit and no wager bonuses were popular again, but these were quickly removed because of the possible abuse they offered. Bonuses including no deposit offers and wager-free spins are still available for UK players today, but they have to adhere to the strict laws applied by the UKGC.
Online Casino and Sportsbetting Advertising Laws in the UK
Online and offline gambling is very popular in the UK and responsible gambling is at the forefront of all regulations. All online casinos and sportsbooks are required by law to offers and promote responsible gambling. UK online casinos and bookmakers must offer the tools and features that encourage responsible gambling. Big brands like William Hill, Ladbrokes, and Paddy Power signed a voluntary code where they agreed that no TV advertising for their brands or gambling will be shown before 9pm. There is no advertising of gambling machines allowed in betting shop windows and 20% of all gambling related advertising space in the UK must be devoted to responsible gambling messages. Online gambling sites must offer players tools such as self-exclusion, cooling off periods, session limits, and deposit limits. They must also provide information on responsible gambling as well as links to helpful websites such as Gam Care and BeGambleAware.
The advertising of gambling products and services must comply with the UK Advertising Codes which are overseen by the Advertising Standards Authority (ASA) and there are specific socially responsible advertising rules that must be followed.
- Gambling ads that can appeal to under 18s: All gambling advertisements must not appeal to children or persons under the age of 18. Advertisers must be careful with the imagery and wording used when advertising their gambling products and games.
- Advertising and sponsorship in sport: Operators must ensure that they comply with all advertising and sponsorship rules and regulations when agreeing on commercial deals with sports clubs. This includes ensuring that their brand is not promotion on junior sections of club websites, their logos or promotional material are not allowed to appear on merchandising designed for children, if teams comprise of players under the age of 18, gambling logos cannot appear on any item of the kit or clothing.
- Young people in marketing material: Marketing for gambling purposes cannot include a child or young person. No one who is under 25 or seems to be under this age can be shown gambling or playing a significant role in the advertisement.
- Open and transparent marketing: Operators must ensure that their marketing does not mislead consumers. They must ensure that all significant terms applying to bonuses or marketing incentives are provided and the significant conditions must be presented at the point of sale for any bonus or promotion, and on any advertising in any medium unless space makes it impossible.
Regulation of UK No Deposit Casino Bonuses
The strict regulation of casino bonuses in the UK has consequences for both operators and players. New regulation changes that affect online casinos and bookmakers have meant the taxation of online casino bonuses and there are new rules around the governing of promotions too. This is sure to change the way UK online casinos operate. These new rules have come into effect following an investigation by the Competition and Markets Authority (CMA) which looked at the adherence of the gambling industry and its consumer protection laws. The new rules and regulations on casino bonuses will have to be adhered to and they will cause issues for both players and operators but before we look at that, let's take a look at the significance of the UK no deposit casino bonuses.
No deposit bonuses are promotions run by UK sites to entice new players to sign up for an account and to help retain existing players by giving them free rewards and incentives. The gambling industry is highly competitive, and these bonuses are crucial when it comes to gaining an edge over the competition.
The no deposit bonus is used by UK casinos to motivate and encourage new signups. They are given free money to gamble with and they get real winnings. There is no need to make a deposit and all they are required to do is create an account. Gamblers can take advantage of these offers and play games for the chance of winning real money. Each site will have its own requirements and terms and conditions. Some sites, for example, will limit the number of games you can play when using a no deposit bonus or the amount of money you can win. They all come with wagering requirements that must be cleared before a payout can be requested. The popular no deposit bonuses for UK players are free spins and free cash.
Why are Bonuses Regulated?
Casinos use bonuses as marketing incentives, and they can tweak them as they wish to reach as many customers as possible. Unfortunately, some bookmarkers and casinos were abusing bonuses and some bonuses are exploitative for customers. Unfair bonuses terms and conditions along with high wagering requirements made it almost impossible for players to follow the rules and still collect any winnings. In a lot of cases, players were signing up for casino bonuses without actually knowing what they were signing up for. The lack of clear guidelines went against consumer protection rights and the UK Gambling Commission set about creating rules and regulations for how UK casinos must define the terms and conditions of their bonuses. There are rules in place that clarify the maximum deposit that UK casino can offer, the minimum wagering requirements, the max bet, the withdrawal limits, and so on. These rules and regulations protect players and casino operators from unfair competition.
Rules and Regulations Governing Casino Bonuses in the UK
There are various departments and regulatory bodies that oversee the gambling industry in the UK, and these include the UKGC, the CMA, and the HMRC. Since 2017, there have been several amendments to the gambling laws, and these include:
- Tax Regulation Changes to UK No Deposit Bonus Offers : This regulation requires that all free casino bonuses must be taxed. This law came into force on the 1st of August 2017. All casinos are now required to pay 15% on promotions, bets, or bonuses, that are used as an incentive to encourage signups and promote their brand. It is part of the government's measure to reduce the adverse effects of gambling and promote responsible gambling. It will also raise more revenue. The income generated from the taxation of no deposit bonuses is predicted to be £100 million by the end of 2021. These new bonus taxation rules target online gambling sites including mobile casinos and online sportsbooks and this was done because of how popular they are and because of the increased number of free bonuses that were being offered.
- Signup Promotion Bonus Regulation Changes : The CMA looked at bonuses back in 2016 and discovered that most UK online casinos and bookmakers offered unfair signup bonuses and that they lacked clear terms and conditions. This led to player confusion and those who joined didn't fully understand what they were agreeing to. It was felt that these unclear terms could lead to players making decisions they might later regret. Online gambling sites must now follow certain rules if they wish to offer bonuses. The terms and conditions of any promotion, free bet, or free spins offer must be clearly outlined. Players cannot be obliged to take part in publicity stunts aimed at promoting the online gambling site in order to cashout out winnings earned from bonuses. Online casinos must clearly state the restrictions and limitations of the different free bonuses and free bets and they should not withhold winnings based on vague terms.
The Consequences of the UK's Strict Regulation of Casino Bonuses
All online casinos and sportsbooks operating in the UK have to adhere to these new regulations and because of them, casino operators have changed their strategies. They have been forced to reduce their marketing and the promotions they offer so they can reduce the amount of tax they will have to pay. They are no longer spending lots of money on the advertising of free bets and no deposit bonus offers which were the primary tool used to attract new players. This means casino operators are seeing lower revenues because of the decrease in numbers signing up. Having said those, those still looking can find no deposit bonuses at Canadian casinos, as well as free offers at Australian casinos too.
For casino players the new regulations mean safer playing environments and clearer terms and conditions on bonuses. While the taxation of no deposit bonuses doesn't affect players directly, it will mean a decline in the total number of promotions and bonuses including free spins offers which are a hugely popular choice.
While the new rules and regulations and the taxation of bonuses is going to see a decrease in the number of bonuses and especially no deposit and free spins bonuses offered to UK players, we do feel that operators will come up with alternatives and we expect to see more valuable casino bonuses being offered. No deposit bonuses in the UK may have failed, but the casino bonus as a whole is a valuable commodity for both players and operators, and we can't see this being abandoned.