- Campaigners have called for reduction to FOBT stakes
- Bookmakers face slashed profits if maximum cut is applied
- Online casinos could benefit from market shake-up
The UK government is reportedly under pressure to take the right action over Fixed Odds Betting Terminals after an official review linked the popular machines with rising problem gambling rates. The Department for Digital, Culture, Media and Sport is considering a cut of the maximum stakes on the machines, from £100 per bet to just £2.
The impact of this cut could have many implications. Some UK bookmakers make more than half of their profits from the machines, and thousands of betting shops could close if the terminals are no longer profitable.
Up to 21,000 jobs in high street bookies might reportedly be lost too, and the Treasury stands to lose millions in gambling taxes annually.
Impact of FOBT stake limits on online casinos
While the high street bookmakers are facing some significant losses that could lead to shop closures, operators with a strong online presence are less concerned about the pending changes to the law.
While traditional operators such as Ladbrokes and William Hill could lose up to half of their income when FOBT stakes are cut, operators with a strong online presence, such as Paddy Power, expect their losses to be mitigated by online casino gains.
In theory, the cut to FOBT stakes could level the playing field for online casino operators. Paddy Power Betfair CEO Breon Corcoran even contacted the Department for Culture, Media and Sport to back calls for a £10 minimum stake on FOBTs. If the high street giants are forced to scale back their operations, this allows online operators to squeeze a larger slice of the market for themselves.
An FOBT stake cut might therefore be good news for the online gambling industry. It will certainly be good for players. Bookmakers suffering falling revenues are likely to introduce new online casino promotions, a better range of games and a faster, more reliable service. By catering to online customers and rewarding their loyalty, bookmakers might be able to offset any losses an FOBT stake reduction would cause.
Public opinion shifts on FOBT use
The media campaign against FOBTs has positioned them as the leading cause of problem gambling in the UK. The recently published government review into gambling activity backs this view. However, the issue of problem gambling is much more complex, and cutting the stakes on FOBTs could just push more problem gamblers onto other games and services.
While the negative impact of FOBTs on problem gamblers is evident in the recent reviews, some studies suggest use of the gambling terminals is actually falling – in part due to this negative association created by campaigners and the media.
A Sky News report in November suggested that FOBT use was falling, and that lottery scratchcards actually account for the largest portion of problem gambling activity in the UK. Online sports betting and online slot use is also rising, with more people opting to bet on their mobile or computer than attend a casino or betting shop.
Future of FOBTs
The Association of British Bookmakers and the Responsible Gambling Strategy Board have separately argued that reducing the stakes might not impact problem gambling rates in the way the Government is presenting.
“It’s not for us to consider the economic damage a reduction to £2 might do to the bookmaking and related industries,” said an RGSB spokesperson. “But we would find it difficult to regard so strong an action as being proportionate on the basis of the existing evidence.”
The Government has recently closed its consultation period and is now considering how to act on the evidence. A balance will need to be struck between protecting gamblers and protecting gambling businesses. A cut to stakes seems inevitable, but this might be higher than the worst case scenario many have considered. A £20 maximum stake is among the possibilities being floated by lawmakers. A decision is expected in the coming weeks.
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