UK FOBT Crackdown Delayed Until 2020, Post-Online Tax Rise

UK FOBT Crackdown Delayed Until 2020, Post-Online Tax Rise

Last month, the UK government may have decided to reduce the maximum stakes on Fixed-Odds Betting Terminals (FOBTs) from £100 to £2, but it appears that bookmakers will now be given a 2-year stay of execution as lawmakers set up and approve legislation. This transitional period is also designed to give bookmakers enough time to reprogram their betting shop terminals and adjust to the new reality, whilst providing them with an expected £4 billion boost ahead of the seismic change.

Treasury vs DCMS

The UK government’s decision to postpone its FOBT crackdown until 2020 came about after industry leaders persuaded politicians that a ‘transition period’ was necessary in order to reduce the negative impact brought about by the new judgement. In the meantime, betting shops said that they would use the extended time allowance to adjust their operations to better cope with the changes, and as an Association of British Bookmakers statement explains:

“The £2 maximum stake will cause thousands of job losses and will require significant readjustment in the industry in terms of shop numbers. Implementation time would be key to enabling operators to utilize redeployment and voluntary redundancy and to renegotiate leases – potentially saving some shops and jobs. In addition software changes to the architecture of hundreds of games will need to be made.”

However, the two year ‘transition period’ is expected to deepen the rift between the UK Treasury and the Department for Digital, Culture, Media and Sport (DCMS) that had initially been expecting to oversee and implement the new FOBT wagering regulation within a nine-month period.

Online Gambling Tax Increase

Prior to its decision to reduce the maximum FOBT stake to just £2, the Treasury had apparently expressed concern that the reduction would make it extremely difficult for the department to replace the lost duties on these machines. In fact, FOBTs had originally been forecast to generate £74 million of the estimated £119 million in UK machine gaming duties between now and 2023, ultimately leading to UK Chancellor Phillip Hammond’s decision to not sign off on a final decision at the time.

Furthermore, William Hill CEO Roger Devlin had also warned that the industry would have to shed more than 20,000 jobs if the government’s decision was immediately imposed. Now that the situation has been resolved, the industry has now been given ample time to make the necessary adjustments to adjust to the new reality.

Nevertheless, bookmakers are expected to start paying a higher rate of tax on their online gambling services following the Autumn 2019 budget. The Treasury had already decided upon imposing a higher tax rate in order to offset lower revenues generated by reduced stake FOBTs, thus providing the department with extra tax revenues ahead of the new FOBT stake mandate. Commenting upon the development, the Treasury explained to Gambling Insider:

“We are changing the rules, so they balance the needs of vulnerable people, those who gamble responsibly and people who work in this sector. In order to cover any negative impact on the public finances, and to protect funding for vital public services, this change will be linked to an increase in Remote Gaming Duty, paid by online gaming operators, at the relevant Budget.”

Business As Usual

In the meantime, it will be business as usual for the country’s thousands of bookmakers, who will be allowed to continue offering FOBT machines with wagering limits set as high as £100 per spin until the £2 limit is imposed in 2020. Needless to say, bookmakers’ satisfaction over the situation will invoke a counter reaction amongst Problem Gambling activists who will see the delay as adding further to the UK’s existing high gambling vulnerability numbers that already stands at 2 million people, of which 430,000 are deemed to have serious gambling problems.

Commenting upon the situation, Labour’s deputy leader Tom Watson said that the Conservative government had shown that it was “fundamentally weak” by caving into pressure from the gambling industry. He also said that the government would be the one held responsible for those lives ruined  by FOBTs until the new regime comes into effect two years hence.