How will slot machines fare in an ever-changing online gambling environment?
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It's been 25 years since American businessman William Scott launched the world's first real money online casino. In the early years of online gambling, classic table games like poker, baccarat and roulette were the most popular with players. Nowadays, slot machines account for the largest chunk of revenues and profits.
Online gambling revenues are increasing. The majority of that growth is driven by the popularity of online slots. Online gambling accounted for around £5 billion in revenues last year in the UK. In the US, the industry is moving toward widespread legalisation.
There are two issues that pose a threat to online slots. Competition and the potential profits of remote gambling have led to record numbers of gambling licence applications in recent years. The market is becoming more saturated and providers are increasing their payouts and increasing RTP percentages. This could lead to a lot of smaller companies falling into financial difficulties when large jackpots are won.
Virtual and augmented reality are the next big thing in the gambling industry. Live casinos have already launched successfully. Online casinos want to close the gap between themselves and land-based casinos. AR and VR will revolutionise the online gambling.
In 2014 David Cameron commissioned a government led report into the social impacts of gambling in the UK. The report found that fixed-odds betting terminals are addictive. In 2010 the government brought into law a requirement on gambling companies to reduce the maximum stake on these terminals from £100 to £2. Online gambling industry is worried that the new government review into gambling will be as harsh as the previous one.
There are a number of threats to the long-term viability of online slots. Competition from within increases the chances of the industry cannibalising itself. The government led review into the Industry is the biggest risk to its future. If the review comes to a similar conclusion as the 2014 report, maximum bets for online slot machines will be substantially cut. This would have devastating impacts on the profits of slot machine operators.
