UK bookmakers are looking at a worst-case scenario as a published report said the government will slash the maximum bet on fixed odds betting terminals to £2.
The UK Sunday Times, citing an unnamed ally of new culture secretary Matt Hancock, reported that the “overwhelming” response during a public review phase on the issue had persuaded UK ministers to cut the maximum stake to the lowest amount being considered.
“Matt wants the new stake to be at the bottom of the range,” the newspaper quoted a Hancock ally as saying. “His attitude to the terminals is very negative because it takes money from reasonable, mature betting, like on the horses.”
The maximum bet on FOBTs is currently £100. The government has said it will recommend cutting that bet to either £50, £20 or £2. It then opened a public review and consultation period on exactly what the new stake should be.
Advocates for problem gamblers have attacked the betting terminals as highly addictive, saying that as much as £300 a minute can be bet on the machines. A report by the UK Gambling Commission last year said 43 percent of players were either problem gamblers or at risk of becoming a problem gambler. Advocates say the terminals feed addiction and called for slashing the maximum bet to £2.
Bookmakers, however, make a substantial amount of their revenue off the FOBTS and have said a drastic cut would cost the industry billions. They have pushed for a £50 maximum.
Further, they have said that a slash to £2 would force the closing of high-street stores if they lose the income form the machines.
“We are very clear that stake cuts will fail to adequately address any issue of problem gambling; the industry has also always made it clear that a cut to stakes will have serious consequences resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing,” said Jim Mullen, CEO of Ladbrokes Coral in a press release responding to the Times story.
Many analysts are expecting a cut to a £20 maximum, which is reportedly supported by the UK Treasury department, which could also see a major loss of tax revenue with a £2 limit.
A report commissioned by the Association of British Bookmakers and compiled by research firm KPMG found that the industry could collectively lose nearly £640 million as a result from a cut of the maximum stake to £2. However, another report by the UK Centre for Economics and Business Research found that a reduction of the maximum FOBTs stake would only cost the industry around £335 million. The association criticized that report saying the center did not have full access to bookmaker’s records.
A Department for Digital, Culture, Media and Sport spokeswoman told Reuters that the government was “currently consulting on what the exact cut should be, and would make a final decision in due course once all the evidence has been considered”.
The report, however, sent shares for UK Bookmakers plummeting on the London Stock Exchange. Shares in Britain’s biggest bookmaker, Ladbrokes Coral, for example, were down nine percent following the story.
“The impact of this rumor on our share price this morning illustrates the drastic impact such a move would have on the retail betting sector,” William Hill chief executive Philip Bowcock said in a press statement after William Hill stock fell about 12 percent following the Times story.
According to other reports, the closing of the government review also saw last-minute submissions calling for a ban on the use of credit cards in online gambling and for an increase to the levy on bookmakers to fund problem gambling programs and treatments.
UK think-tank ResPublica found that the country’s annual expenditure on problem gambling research, education and treatment is only £133 per person, compared with £377 on drug addiction and £385 on alcohol misuse. It said a mandatory levy set at one percent of the industry’s profits would raise £135m to bridge the funding gap.
UK gambling companies currently contribute 0.1 percent of their revenues for problem gaming programs on a voluntary basis. GambleAware, the main conduit of those funds has charged that many gambling firms fail to honor that commitment.
GambleAware and Citizens’ Advice have both also called for a mandatory levy to better fund problem gambling treatment. The groups also called for a ban on using credit cards to bet online, which it said “significantly increases the risk gamblers will gamble more than they can afford.”
Also, the British Horseracing Authority’s submission to the review warned of “unintended consequences to British racing and the wider rural economy” if the maximum stake is reduced to £2.
Will Lambe, a BHA executive director, said in a press release that the authority’s “submission on behalf of British racing will emphasize how our sport’s commitment to social responsibility and contribution to the economy, including employment, education and training and charitable initiatives in many rural communities, is supported by sustainable income from the betting sector.
“Any measures which severely compromise the sport’s financial stability would have unintended consequences to British racing and the wider rural economy,” he said.
