UK Bookmakers Decry FOBTs Maximum Stake Reduction to £2May 18, 2018 10:07 am
Following a year of deliberation, the UK government has announced its decision to slash the maximum stake that gamblers can wager on fixed-odds betting terminals (FOBTs) from £100 to just £2. Needless to say, this has has been greeted with consternation by many of the country’s gambling operators who have increasingly relied upon income from these machines to boost their revenues over the past few years.
Nevertheless, as Matt Hancock, Secretary of State for the Department for Digital, Culture, Media and Sport (DCMS), points out: “Sometimes in politics you have the chance to really do something to help people and, in particular, this case to help some very vulnerable people – hundreds of thousands of people who lose thousands of pounds on these machines.”
Gambling Addiction and Extreme Losses
UK bookmakers are traditionally places where punters go to place sports bets, with these venues also offering customers the chance to gamble a few quid while playing roulette type slot machines. The problem is that the stakes on these FOBTs are so high and the games themselves are so addictive that according to the UK Gambling Commission (UKGC) £416.49 million more in revenue was generated by these slots than from the bookmakers’ over-the-counter bets.
Providing a further insight into how lucrative FOBTs are for gambling operators, each of the 33,511 FOBTs currently located in Britain earns an average of £53,000 per year, with their stakes and payout set in such a way as a single gambler can lose up to £13,777 over a seven hour period. Furthermore, recent stats show that a massive 14% of all punters who use FOBT have subsequently succumbed to some level of gambling addiction, with this consideration paramount in the UK government’s decision to settle on a £2 max as a means of preventing players from suffering extreme losses. As Matt Hancock explains in a statement:
“When faced with the choice of halfway measures or doing everything we can to protect vulnerable people, we have chosen to take a stand. These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all.”
Bookmakers Anticipating Huge Losses
While a review of FOBTs stakes was being undertaken, bookmakers in the UK expressed their concerns that their revenues would be severely hit by too large a reduction in the maximum allowable stakes on FOBTs. After all, the majority of bookmakers in the country derive more than 50% of their revenues from these type of slot machines, with the Association of British Bookmakers (ABB) warning the government that in now stands to take a tax revenue hit of at least £1.1 billion by 2020.
The ABB has also estimated that the reduction could lead to as many as 4,000 high street bookmakers shutting shop, and 21,000 members of staff losing their jobs.
William Hill, for instance, said 38% of bookmakers may now have to close, resulting in its gaming net revenues dropping by as much as 45%, while GVC said that it expects to suffer a £160 million fall in its annual earnings. Paddy Power Betfair, on the other hand, is less exposed to the industry than most of its competitors, with FOBTs only representing around 2% of its total revenue, and the stake reduction expected to lose it around £46 million per year.
Other New Regulations Planned
The FOBTs maximum stake reduction from £100 to just £2 is still subject to a parliamentary vote next year, but if approved, the government will subsidize its lower tax earnings by increasing the Remote Gaming Duty paid by online gambling firms, which currently stands at 15%. A slew of other gambling regulations have also been suggested and may be acted upon in order to protect problem gamblers or those in danger of developing an addiction, including strict age checks, and imposing online gambling spending limits.