Key takeaways after government review commits to reduction of stake sizes on fixed odds betting terminals

  • 12-week consultation period opens over FOBT stakes
  • Bookmakers could lose millions when change is enforced
  • Report also addresses fast-growing online gambling sector

The UK Government has confirmed that there will be a reduction in maximum fixed odds betting terminal (FOBT) stakes following the publication of its long-awaited report into the British gambling industry.

Fixed-Odds-Betting-Terminal-(FOBT)
The future of one machine, a fixed odds betting terminal, will have a big impact on the bookmaker industry when their fate is announced later this year.

However, bookmakers still face a period of uncertainty while the Department for Digital Culture, Sport and Media decides how much to cut stakes by.

The 12-week consultation is set to end on January 23, 2018.

The report highlights the extent of gambling problems within Britain, which have remained relatively stable in recent years, though pressure is always on to reduce the numbers.

It gives assessments of how each maximum stake option – £50, £30, £20 and £2 – would impact players and the betting industry, and calls for evidence from industry insiders and campaign groups to support proposals and recommendations for each stake size.

Balancing act for Government

The review’s justification for a FOBT stake reduction was that 11% of gambling machine users have a gambling problem and a further 32% were identified as “at risk of harm.”

At stakes of £20 or more, around 44% of players fall into the at-risk or problem categories; when the maximum stake is just £2, only 19% of players show signs of addiction.

On the other hand, there are currently 53,000 people employed in the UK’s betting shops, and more than one third of those jobs could be under threat due to the losses the industry would face if stakes were reduced.

The estimates are that FOBTs will generate $1 billion in taxes by 2020, and FOBT revenues account for over half of all income at some of the nation’s leading bookmakers.

“The weight of the evidence… justifies Government action on betting machines,” the report states clearly.

It also notes that “the factors which influence the extent of harm to the player are wider than one product,” and warns that previous steps to reduce stakes did not actually relieve problem gambling rates, but instead prompted a rise in people betting the maximum.

Waiting game for bookmakers as 12-week consultation opens

It has been several months since the Government first announced it would launch a review into FOBTs and the wider gambling industry – and betting companies have been in limbo since the announcement. Bookies are mulling planned mergers and deals due to problems with valuing companies ahead of the stake reduction, and they cannot say for certain whether all high street betting shops will remain open after changes are enforced.

Some had hoped that a decision would be made when the review was launched, however the Government has opted to open up a consultation period to decide how FOBT stakes should be set. This does give bookmakers and trade groups the chance to present evidence as to their own recommendations.

The Association of British Bookmakers has previously argued that setting stake limits will not on their own tackle the root causes of problem gambling, and that the speed of play and return to player (RTP) rates have just as much impact on gambling levels as the stake amount.

The ABB has previously said that the £100 level should remain – but the 12 week consultation on the review is ongoing.

If a reduction is enforced, the group would support a £50 maximum stake to limit the financial impact on betting businesses.

The report acknowledges the group’s recommendations, but it also notes the calls from various groups that recommend a £2 maximum stake.

These include a number of leading church organizations, the All-Party Parliamentary Group, and media sources including the Daily Mail and the Mirror. There is also increasing public pressure to introduce a £2 cap.

Report identifies need for wider gambling reforms

According to the review, online gambling in the UK has grown to almost half of the entire gaming industry and 10% of gamblers now go online to place bets.

Tackling FOBT stakes is a key aim of the report, but the gambling review aims to reform the whole industry and tackle gambling-related harm to players and communities.

The report calls on the regulator, the UK Gambling Commission to put forward its own recommendations to improve gaming machines in general, and to improve awareness campaigns and regulatory actions.

The industry regulator has played a key part in gathering information for the review, and it will be one of the main influencers when the Department for Digital, Culture, Media and Sport is ready to make a decision on FOBT stakes.

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