The UK Government’s crackdown on fixed-odds betting terminals (FOBTs) has resulted in increased losses for the British bookmaker Betfred. The company revealed that its losses have risen to over £40 million due to the stricter rules which the country’s authorities had imposed on local bookmakers.
Although the report covers the twelve-month period ending in September 2018 and the official reduction in the machines’ maximum stakes happened in April 2019, the gambling operator claims suffered the loss due to exceptional costs estimated at £119.6 million. According to the announcement made by the company, the losses were mainly caused by a write-down, which is the reduction in an asset’s book value, in the bookmaker’s retail business.
According to Betfred’s latest report, that ended up with the company’s operating loss’ increase from £13.4 million the previous year, to £41.4 million in the twelve months to September 2018. The bookmaker revealed that it was the exceptional costs which were mainly to relate to impairments of the retail division following the results of the Government’s triennial review into the sector, and more specifically, into the controversial machines.
At the end of the accounting period, Betfred had a total of 1,650 betting outlets across the country. However, the company’s owner Fred Done has explained that the bookmaker could see about 500 shop closures as a result of the Government’s decision to crack down on the UK gambling industry.
Government’s Decision to Cut FOBT Max Stakes Causes Turbulence
According to the company’s accounts, the strategy of the group would probably be associated with reviewing the bookmaker’s retail estate.
Betfred also reported a 14.7% turnover increase to £727.6 million and a 43.3% EBITDA increase to £119.4 million. The positive result is believed to be due to the decision of the company to purchase 322 betting shops from its rivals Ladbrokes and Coral. An increase registered in the number of online customers has also had a positive impact on the company’s performance.
As revealed by Betfred, the group had received £20 million from Alizeti for a 25% share in the Tote. The twelve-month period to September 2018 also covered the end of the gambling operator’s exclusive seven-year licence under which Betfred was allowed to offer pool betting services to its customers.
In April 2019, the UK Government finally introduced the long-awaited rules under which the maximum stake on controversial fixed-odds betting terminals was cut from £100 to £2 as part of the local authority’s attempt to tackle rising problem gambling rates. At the time when the authorities announced their plans to slash the maximum stake of the machines, a number of British gambling companies rolled out projections that the crackdown would hit them hard, leading to large losses.
As mentioned above, Betfred was one of these bookmakers, saying that the measure could force it to close up to 500 of its betting shops which would no longer remain viable after the change is made.
- Author
Olivia Cole
