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UK – FOBT stake decision splits opinion

By - 18 May 2018

The maximum permitted stake for fixed-odds betting terminals (FOBTs) is set to be cut from £100 to £2 by the UK government. The Department for Digital, Culture, Media and Sport (DCMS) opted for £2 having dismissed advice from the UK Gambling Commission to set the figure at £30. The decision has been lauded by anti-FOBT groups as the government ‘taking a stand’ against what it sees as a blight on society. UK bookmakers, who derive more than half of their revenue from the machines, have said that the decision will mean the closure of hundreds of licensed betting offices, the loss of £400m in duty payments and the loss of thousands of jobs in the UK.

The change, subject to a parliamentary vote likely to take place in 2019, will reduce the government’s tax take from the machines, but this will be paid for by an increase in duty applied to online gambling – sending shockwaves through the online gaming sector.

The decision, which will require Parliamentary approval (although this is likely to be a formality), is likely to hit land-based betting operators profits hard and the industry claims that it will lead to the closure of thousands of marginally profitable betting offices and wide-scale job losses.

“Whether this nightmare scenario turns out to be a scare story or reality remains to be seen, but the decision will certainly have a significant impact on the land-based betting industr,” said Richard Williams, Joint-Head of Licensing, Gaming & Regulatory law at leading London legal firm Joelson. “Commentators are suggesting that legislation to implement this decision may not be in place until 2020.

“In order to plug the gap in Government finances due to a reduction in duty payments, it is proposed that remote gaming duty (RGD – currently 15 per cent of profits) will be raised. RGD will need to be raised to 20 per cent or possibly 25 per cent of online operators’ profits to plug the gap. So the Government is basically asking online operators to make up the duty shortfall caused by its own decision on FOBTs.

“In March 2018, the Gambling Commission advised the Government to cut FOBT slots stakes to £2, but that the stake limit for non-slots games (including roulette) should be set at £30 or below. It seems strange that the Government has ignored that chink of light for the industry, which would have allowed a higher maximum stake for roulette, which is widely played on FOBTs. However, there are some people who argue that “hard” casino games such as roulette should never have been allowed in betting offices as “fixed odds” products in the first place.”

The UK government also outlined a package of gambling regulations designed to protect vulnerable people and the young, which again take aim at the online operators. They include the use of spending limits for online gambling until companies have carried out affordability checks to ensure gamblers have enough money to play. The age limit for the national lottery, which can be played at 16, will also be reviewed, while online gambling firms will be made to tighten up age checks.

TV adverts for gambling will have to show responsible gambling messages for their entire duration, while there will also be a dedicated TV ad campaign targeting addiction. Public Health England will also carry out a review of the damage to health caused by gambling, amid concern about the lack of attention it has received compared with alcohol and drugs.

The DCMS Minister, Tracey Crouch warned the rest of the industry not to “take its foot off the pedal” on tackling addiction, warning online gambling firms in particular that they could face new restrictions unless they ramp up their efforts.
In a statement, the UK National Casino Forum added that it understood why a decision has been taken to cut the maximum stakes for B2 machines on the high street and that it welcomed the commitment from the DCMS to consider a fresh review of machine allocations in casinos, which are mostly limited to 20 gaming machines. “We put forward modest proposals to modernise and harmonise the sector, which would allow casinos to offer the leisure experience our customers can find around the world, and the DCMS has accepted that machine allocations are low by international standards,” stated the NCF. “These changes would encourage investment in the sector and socially responsible growth, which the consultation was designed to achieve, whilst preventing harm to players and generating more revenue for HM Treasury.”

NCF members are currently trialling new player protection measures, including time and limit setting and increased tracked play, and will be presenting the evidence from these trials to the Gambling Commission and the Government in the coming months.

The UK amusements association, BACTA, also warmly welcomed the DCMS’ decision, stating that a stake reduction to £2 has long been needed to protect consumers from the harm caused by FOBTs. “This is a decision that puts player protection first, and will allow the gambling industry as a whole to move forwards and create a safer, more socially responsible environment for consumers,” stated BACTA. “It is a testament to the wide-ranging campaign for stake reduction from concerned individuals and organisations across politics, public health and the wider gaming sector. The Government has made the right decision and it now needs to be implemented without delay.”

The Association of British Bookmakers, which has campaigned against a stake cut, took a different view: “This is a decision that will have far-reaching implications for betting shops on the high street. We expect over 4,000 shops to close and 21,000 colleagues to lose their jobs.

“The independent expert advice warned that this would simply shift people, the majority of whom gamble responsibly, to alternative forms of gambling where there is less chance of human interaction and its impact on problem gambling levels is far from certain.”

William Hill, whose shares soared earlier this week after a supreme court ruling paved the way for legalised sports betting in the US, said it expects up to 900 shops to become unprofitable, with some likely to close soon and operating profits set to decline by up to £100m.

Betfred has previously said it would consider launching a judicial review to get the stake cut overturned, but did not comment on whether it would go ahead.
However, Paddy Power Betfair said the bookmaking industry had “suffered reputational damage” because of FOBTs and welcomed the government’s decision. A spokesperson for Jenningsbet said the industry “needs to go back to its roots and that means a more collaborative and healthy relationship with horse and greyhound racing”.

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