Gambling Operators Brace for UK’s Massive FOBT Crackdown

Written by: Craig Simpkin | February 1st, 2018

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Gambling Operators Brace for UK’s Massive FOBT Crackdown

For the past 12 weeks, the UK government has been conducting a period of consultation regarding fixed odds betting terminals (FOBTs). Reports are emerging which suggest a monumental crackdown is nigh. FOBTs are the machines in betting shops such as Paddy Power and Betfair which feature tons of games, from arcade-style favourites to casino classics like roulette and blackjack.

They have been dubbed somewhat dramatically as the ‘crack cocaine of gambling’, but are essential to the trading profits of bookmakers. As reported in the Racing Post, annual FOBT revenue reaches £1.8bn in the UK – dwarfing the £1.3bn generated from traditional betting sources.

These betting terminals have remained largely unregulated since their introduction to betting shops, causing controversy with a number of opposition groups who believe the link between FOBTs and gambling addiction figures is all too stark. The government’s new Secretary of State for Digital, Culture, Media and Sport, Matt Hancock, is believed to be an opponent of the machines, with plans to impose a maximum stake of £2.

The repercussions for betting firms have already manifested themselves even without formal legislation being introduced. Shares at LadbrokesCoral and William Hill dropped by 11.84% and 13.73% respectively this week, with further reductions expected if Hancock makes an official statement regarding the new FOBT regulations.

Counting the Cost

The hope is that cracking down on the amount punters can wager at these FOBTs will cut back on problem gambling. But the implications for the gambling industry are rather worrying, with pundits estimating that Ladbrokes Coral could lose in excess of £430m annually should the maximum FOBT stake be lowered to £2.

And that’s not all. A forecast from the Association of British Bookmakers (ABB) suggests that some 3,000 betting shops would be at risk of closure under the new legislation, which would put roughly 15,000 jobs in jeopardy. A statement from the ABB read:

“Betting shops cater for over six million customers every year and the vast majority of them gamble responsibly. We know that most problem gamblers use seven or more different types of gambling products, therefore there is a challenge for the whole gambling industry to move from a position where there is a stable level of problem gambling in this country to one where problem gambling rates are decreasing."

The Final Fence?

As anybody who has frequented a football stadium or a racecourse knows, betting is a cornerstone of many sporting institutions in the UK. A reduction in profits for the gambling sector could have dire consequences for a number of correlating industries, with British and Irish horseracing likely to be among the hardest hit.

A large percentage of their funding comes from sponsorship and advertising, with all bookmakers who operate on these shores legally obliged to pay a portion of their profits to the British Horseracing Authority.

Indeed, chief executive of the Arena Racing Company, Martin Cruddace, confirmed that the FOBT crackdown would result in a ‘minimum £55 million cut to the sport’s income’, with the vast majority of that coming from prize money for the sport’s stellar races.

“We fully support the government’s desire to pursue a policy that can protect consumers within a socially responsible gambling industry. It is not for us to give a view on what the maximum stake should be, but we do believe we have to point out the impact on British horseracing of a reduction to £2.”

The furore regarding the proposed £2 reduction has created the possibility of a legal challenge from UK bookmakers, although this is being classed as a ‘last resort’ for now. A judicial review would see any forthcoming legislation being challenged in the court of law, with a judge deciding whether an official decision is lawful.

This would challenge the way in which the decision was reached, rather than the actual outcome. Jim Mullen, the chief executive of Ladbrokes Coral, told BBC Radio 4:

“we have invested millions both in products and processes and with the gambling charities to address the problem which we recognise is there, and I think if we focus on what we are trying to do we can get to a positive conclusion.”

Conservative MP Laurence Robertson, whose Tewkesbury constituency includes Cheltenham racecourse, has offered his support to bookmakers. He said there was ‘no evidence’ of a rise in problem gambling linked to FOBTs, and that restricting stakes did not provide a quick-fix solution to the issue.

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