Fixed-odds betting terminals stakes slashed to £2
Stakes for fixed-odds betting terminals (FOBTs) are to be slashed from £100 to a maximum £2 after the Department for Culture, Digital, Media and Sport (DCMS) finally delivered its verdict after more than a year long review of the gambling industry.
The DCMS has ignored strong calls from operators, many of whom derive more than half of their earnings from the machines, to consider not slashing the stakes so drastically. The new ruling must be approved by Parliament and there is no current deadline for the terms to be implemented.
The focus of this triennial review of the industry has been on FOBTs and how much government would cut stakes on the machines by.
Bookmakers were given a glimmer of hope in April when Chancellor Philip Hammond was reported to be hesitant of signing off on a stake cut to £2, due to the loss of millions of pounds in tax revenue that would result from the cut.
However, that duty tax for online gambling will be increased to make up for the shortfall, with the details to be published at the next budget. The tax – remote gaming duty – is currently set at 15% of profits.
Speaking about the decision, Matt Hancock, Minister of the DCMS, said:
When faced with the choice of halfway measures or doing everything we can to protect vulnerable people, we have chosen to take a stand. These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all.– Matt Hancock, Minister of the DCMS
Alongside this monumental ruling, the government outlined new measures to protect young people from gambling. The review also focused on advertising standards in the industry, with a new rule also announced that will see advertisers forced to show responsible gambling messages for the entire duration of adverts showing gambling products.
Bookmakers’ advice ignored
A cut to a £2 maximum state was the nuclear outcome for bookmakers, who sought throughout to issue advice and guidance to government against such a decision.
Alongside the point that government would lose millions in tax revenue were statements from bookmakers that thousands of jobs will be lost as many retail shops will be forced to close.
Aside from the financial impact, bookmakers will also feel aggrieved that their advice was not heeded by government. Even the UK Gambling Commission recommended to government not to cut stakes by the maximum amount possible, stating they should be cut to £30.
GVC Holdings, the owners of Ladbrokes Coral, has updated the stock market and will seek time to implement the new regulations, but has stated it will not seek a judicial review of the ruling. Ladbrokes Coral expects to lose £160m per year as a result of the verdict.
William Hill has also provided preliminary guidance to its investors, as the operator expects to see a reduction in revenue of between 35-45%. Shares in William Hill rose earlier this week after the news that sports betting is to be legalised in the US, but dropped 3% after this morning’s news. Shares at Paddy Power had dropped 1.5% at the time of writing.
MPs welcome the news
Most outside of the industry are welcoming the news. The cut had support in parliament throughout, with the Conservative party threatening revolt in March should the cut not be introduced.
MPs have long called FOBTs a blight on society and compared the them to crack cocaine due to how addictive they are.
Alongside MPs, many individuals whose lives had been affected by addiction to the machines came forward to support the cut.
Speaking about the ruling, Carolyn Harris, Labour MP and chair of a cross-party FOBT group, said:
This is something I, and others, have long campaigned for. FOBTs have caused too much social harm and huge losses for those who can least afford it. Last year there were more than 230,000 individual sessions in which a user lost more than £1,000. These machines have increased the risk of problem gambling, which carries a very significant social and economic cost. This was morally the right decision to make and it is victory for all those people whose lives have been blighted by these toxic machines.– Carolyn Harris, Labour MP