UK Bookmakers Hit By New Changes To Fed Wire Act

January 24, 2019 by Kate Leaman

The gambling industry in the United Kingdom has flourished for a number of years which has allowed iGaming operators to witness a massive growth spike.

However, things have changed considerably in the last 18 months as the UK Gambling Commission has decided to crack the whip and clean up the gambling market.

The American shared liquidity online gambling market is expected to take a major hit in 2019 as legislators surprised everyone by stating that the Fed Wire act had not been interpreted correctly with respect to online shared liquidity arrangements.

The authorities have given iGaming operators up to 90 days to stop their shared liquidity arrangements.

While the ruling does not directly impact the British market or UK operators, they have still taken a hit. This is because there have been talks in the past of merging the UK and selected US markets to extend the overall prize pool and player database. Shares of UK based gambling operators experienced a drop in prices once news broke of a possible change to the Fed Wire act interpretation.

There were talks that New Jersey could enter into a shared liquidity arrangement with the UK. New Jersey has a shared liquidity arrangement with Nevada and Delaware and that will have to come to an end soon.

UK Operators Get Hit From Multiple Sides

The UK gambling watchdog was forced to take drastic measures after it was confronted with a rise in problem gambling numbers. The first target was the reduction of fixed odd betting terminal (FOBTs) stakes from £100 to £2. The change is expected to come into play from April 2019 and British bookmakers expect their profits to drop by 50 percent or more.

The UK Government also proposed to raise Remote Gaming Duty taxes from 15 percent to 21 percent on iGaming operators and this will significantly dent their profits. If this wasn’t enough, the advertising watchdog has implemented stringent regulations to prevent gambling companies from having a free rein and targeting the younger generation.

Gambling operators in the UK will have to wait and see how things work out for them during the coming months. A massive reduction in profits could force a number of the smaller iGaming operators to wind up operations in the UK or sell their operations to a major player resulting in market consolidation.