FOBT Stake Slash Hits Smaller Bookies Hard
September 27, 2019
The Fixed Odds Betting Terminal (FOBT) debate has been a contentious topic in British politics for a while now. Naturally, there was no avoiding it at the 2019 edition of the Betting on Sports Conference, which took place recently at the Olympia Conference Centre in London. A collection of more than 3,500 senior executives from sectors across the gambling industry held many discussions about one of the UK’s most divisive subjects, both formal and informal.
As of April 1 this year, Fixed Odds Betting Terminals – which are usually found in high street betting shops – had their maximum stakes reduced to just £2 per play. This measure was imposed by the UK government and the UK Gambling Commission as a bid to reduce growing problem gambling rates in Britain. Previously, the terminals’ maximum stakes had been set at £100.
Legislation Criticised by Experts
Some locals and experts are concerned that these changes might mark the beginning of the end for traditional high street bookmakers. GVC and William Hill, the owners of Ladbrokes and Coral, have both since confirmed plans for a mass closure of their betting shops due to worrisome falls in their revenue streams since April.
With all this said, while such large betting brands are continuing to thrive through their online presences and the newly regulated US market, independent bookies in the UK who trade only at physical outlets have been left scrambling to find new ways to bring in alternative revenue sources.
Howard Chisholm, a traditional bookmaker and director of Bookmakers Technology Consortium, assists independent bookies to embrace new technology and channels that could stabilise their revenue streams. Chisholm believes that the new FOBT legislation has not worked as intended, and has failed to protect vulnerable punters.
The director also noted that most shops now only have B3 machines instead of B2 FOBTs, creating an odd and unsatisfying situation for punters. Instead, he says, these customers are turning to online casinos to find what they are looking for, while dozens of shops close in their wake. He added that Will Hill has announced over 700 shop closures, and that his own business is starting to dwindle as well.
How Independent Firms Will Cope
At first glance, things may seem hopeless for smaller bookies that are trying to survive the legislative changes. Some bookmakers have reported falls of 39% in FOBT revenues immediately after the law was implemented. Income from the machines has since stabilised, but for most companies it has not been enough to keep their shops afloat.
Chisholm says that this is not the end of high street betting, however. He and his colleagues are hard at work finding alternatives for punters who prefer to gamble electronically on land. He says that now, bookies simply have to manage their remaining estates within regulations until they can find appropriate solutions. Some alternatives that have proven successful so far are enhancing virtual content that is supplied to bookies and sourcing more games that offer random winning chances without human influence. Virtual sports betting is also growing in popularity.
Knock-On Effects to Come
Managing Director at international gaming consultants Tottenham & Co, Andrew Tottenham, thinks that the industry is simply undergoing transitional changes, although he does recognise a need for change. He says that the main reasons behind the new legislation are a lack of trust in modern institutions and the public’s lack of trust in politicians and police, and the industry becoming more tightly regulated.
Many Brits will undoubtedly welcome the closure of bookie shops on UK high streets, he says, but others will live in fear of debt and unemployment. Still, other experts say that the change will have positive impacts too, like a knock-on effect on other countries that will look to UK regulators for regulatory inspiration.
In the meantime, the Department of Digital, Culture, Media and Sport have estimated that the stake reductions will cost the high street bookmaking sector £540 million per annum.