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With the bonus-obsessed, white label-fueled online bingo sector arguably having most to lose from the regulation and tax changes sweeping through the UK industry, Phil Blackwell looks at how it can restack the odds in its favour.
Published 10th June 2019 With the bonus-obsessed, white label-fueled online bingo sector arguably having most to lose from the regulation and tax changes sweeping through the UK industry, Phil Blackwell looks at how it can restack the odds in its favour The rate of Remote Gaming Duty RGD payable by online gambling businesses to the Rgd bonus government is set to increase from 15% to 21% on 1 April this year.
RGD, a form of point-of-consumption tax, was first introduced in 2014 and amended in August 2017 to incorporate levies on certain free bets and bonuses.
The 2019 increase will follow two other regulatory changes set to come into effect this spring following a recent uprising of anti-gambling media sentiment and the resignation of sports minister Tracey Crouch.
These are sweeping changes that will affect both online and offline gambling operators and affiliates, with the effects seemingly anticipated through a series of recent industry reviews and acquisitions, from Jackpotjoy Group selling Costa Bingo to 888 to Sun Bingo extending its deal with Playtech by up to 15 years on a revenueshare basis.
But as more restrictions are imposed and the cost of acquiring players increases, it is the bonus-obsessed, white label-fueled online bingo industry that perhaps has most to lose.
Eyes down for an uncomfortable read.
ONE WAY OR ANOTHER Perhaps the most frustrating aspect of the impending legislation is the hypocrisy displayed by the government in its structure and timing.
When announcing the RGD increase, Chancellor of the Exchequer Philip Hammond clearly correlated the online tax rise with the need to offset the revenue shortfall that the new offline FOBT limit would bring.
Whatever the motives, change is coming and challenges lie ahead.
It was also completely fake.
However, what it did achieve was interest from multiple affiliates hoping to ride the wave of commission for a new site not restrained by the white-label status that was — and still is — so prominent in the online bingo space.
We predicted that the expansion of RGD to bonuses would result in a contraction of the wider market and force operators to reconsider excessive promotions as acquisition incentives.
While there has been evidence of this happening, such as the introduction of prize-based offers instead of mere bonus cash and the acquisition of Cozy Games by GVC, there is no better time than the present to consider the compounded impact of further legislation in 2019.
Last October saw fiction almost become reality as we released MrQ.
More on that later.
PAYING FOR THE 6% Like any point of consumption tax, the 21% RGD is unlikely to be absorbed completely by the point of consumption.
It is far more likely, and currently the case, that the additional costs will rgd bonus passed onto customers and affiliates.
The unavoidable tax and additional KYC expenses will be layered into marketing budgets, increasing average CPAs and reducing ROIs.
So what might this mean in real terms?
THE COST TO CUSTOMERS Fewer, more restrictive bonuses Wave goodbye to 500% welcome packages and say hello to poorer odds, more clauses and less return.
Squeezing probabilities is a viable strategy to retain revenues, albeit at the probable expense of bad publicity and lower player value.
Transaction fees or limitations Some rgd bonus brands already charge a fee to deposit or withdraw in the UK, and we could expect to see such a direct approach applied more generally to recoup extra costs.
Perhaps the simplest way to offset the higher tax for affiliate channels is to incorporate the charge in this way.
However, CPA-only or tenancy-based commission structures may have to concede some ground where an admin fee cannot be applied in the absence of revenue share, especially if the demand for players no longer exceeds supply.
THE OPPORTUNITIES FOR OPERATORS AND THREATS TO AFFILIATES Fortunately, there are ways for UK bingo operators to minimise the impact of increased costs while actually increasing the attractiveness of their brand to players.
At MrQ, we have a single real money wallet for players with a welcome bonus of free tickets to a free bingo room and genuine free spins.
We are not exposed to the expenses that accompany large match-deposit offers, but instead limit our liability to the value of the spins only, assuming positive GGR.
Build a brand with real USPs A renewed focus on retention is an obvious and overlooked answer to rising acquisition costs and taxes.
The white label nature of the online bingo industry is not set up to excel in the realms of originality and brand building.
Identical software and welcome offers presented by different names and logos is nothing more than painting the same car a different colour.
The boom of white label bingo sites allowed smaller operators to quickly and easily make money online with little regard for the quality of the product ultimately being sold.
It is, of course, not easy to create new software from scratch, especially for small- to medium-sized bingo operators, but the market is agnostic to the challenges of individual businesses.
At Lindar, we built MrQ with a small team of less than 20 people and benefited from our flexibility and ability to react fast.
Retaining this while continuing to scale will almost certainly be more difficult, but the success of other proprietary brands such as Tombola and Mfortune suggests that it is not impossible.
In fact, it might be essential.
Paying more in one area can be balanced by paying less in another.
If existing brands fail to react, we could see an emergence of new operators into the industry similar to the rise of challenger banks in finance such as Revolut, Tide and Monzo.
Standalone bingo platforms offer the chance for operators to develop real and authentic brands, supported by unique and progressive concepts, with the added benefit of paying less commission to thirdparty integrations.
From an affiliate and PPC perspective, it is more expensive to acquire slots and casino players directly than it is to attract bingo players and later migrate them to instant games.
The same logic can be applied to other products too.
Lottery players are also cheaper to acquire.
The rush to diversify product offering is already happening with casinos and the rapid inclusion of sportsbooks to traditionally non-sports websites.
This could leave more expensive affiliates especially at risk should increased taxes make existing high commissions less profitable than they were before.
One of the most cost-effective and most complex player sources is Rgd bonus />Sites that already rank well for highvolume keywords may be best placed pack iclone 5 bonus their spend on organic search instead of increasing budgets for PPC.
This is still pretty much the case even today.
In the most Orwellian of circumstances, affiliates could not only see current deals reduced or removed but also find themselves competing for clicks with former partners in Google search.
BET TO THE FUTURE Despite all of the above, the igaming industry should really be counting its blessings.
Online gambling still flies under the radar of most taboo-fetishising media publishers.
The humble betting shop, for so long an accepted https://separateschooleducation.info/bonus/bonus-stage-sonic-3.html of British high streets, has become the 5 bonus focus of outrage.
The rgd bonus reacted by increasing taxation elsewhere.
These changes scream of politics, not protection.
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