Over the last few weeks, the possibility that high-street bookmakers will face a crackdown on fixed-odds betting terminals (FOBTs) seems to have increased, considering the increasing pressure on the industry in the light of the upcoming UK Government review.
The past months have seen British bookmakers bet on various saviours to help them stop the regulatory review of some of the biggest gambling operators in the country.
The truth is that the largest British bookmakers, the ones brought large revenues by fixed-odds betting machines will be seriously hit in case that the UK Government makes a decision to impose a crackdown on the industry. The country’s regulatory authorities, Members of the Parliament as well as several charity organisations have raised a red flag about the possible negative effects that FOBTs could have on local players.
As Casino Guardian has previously reported, the increasing number of problem gamblers have been widely associated with fixed-odds betting machines and their detrimental influence on players’ lives. The UK Gambling Commission (UKGC) has warned that more and more money are being spent on the addictive FOBTs, with the latter being the major revenue drivers of British betting shops.
British Bookmakers Could Lose as Much as £150 million
A recent analysts report cited by The Financial Times showed that UK gambling operators could lose an amount of over £150 million in revenue on an annual basis in case of clampdown on fixed-odds betting terminals.
The review of the controversial FOBTs is expected to be officially presented in October, after it has already been delayed due to certain misunderstandings between the UK Treasury and the Department for Culture, Media and Sport (DCMS). In the review, the DCMS is to address various issues related to the UK gambling industry, with one of the key issues being the harm caused by fixed-odds betting machines.
The large maximum stakes allowed, as well as the gameplay speed and the addictiveness of FOBTs have been the main reasons why the machines have been scolded on numerous occasions by their opponents. Currently, FOBTs allow UK players to bet a maximum amount of £100 every 20 seconds, which makes it possible for a gambler to lose an enormous amount of £18,000 in a single hour. On Tuesday night, the Chief Executive Officer of the Association of British Bookmakers Malcolm George called the figure “totally unrealistic”, saying other forms of gambling could have much worse impact on players as far as problem gambling is concerned.
If the opinions of some of the machines’ proponents are taken into account by the country’s Government and the maximum stake allowed on fixed-odds betting machines is really reduced from £100 to only £2, all betting operators that have high-street betting shops are going to suffer a severe financial blow. Of course, the consequences would be most serious for the largest bookmakers in the country, starting with Ladbrokes Coral, William Hill and Paddy Power Betfair.
Some market analysts predict that such a reduction is not possible to happen at this stage, as the losses for the UK gambling industry would be severe. A much more expected case scenario is a reduction to a £20-£30 stake, that would have a less dramatic impact on local bookmakers. According to market experts, other possible stakes considered by the authorities are ones of £10 and £50.
As one of the most serious opponents of the possible crackdown on the industry and fixed-odds betting machines, the Association of British Bookmakers has claimed that the reduction of the maximum FOBTs stake from £100 to £20 could lead to the closure of about 2,500 shops nationwide by 2020, and a reduction to £10 could force British bookmakers shut about 3,300 high-street outlets over the next couple of years.
Ladbrokes Coral Possible Losses
Currently, Ladbrokes Coral is considered the largest bookmaker in the UK, with the combined company owning more than 3,600 betting shops across the country. Logically, the biggest bookmaker is also set to be most seriously hurt by a possible FOBTs crackdown.
According to recent reports, if the UK Government decides to impose stricter measures on fixed-odds betting machines and reduce the maximum stake allowed on such terminals, Ladbrokes Coral is expected to lose approximately £450 million in sales. Barclays analysts have shared that the bookmaker is set to be hit harder than any other British bookmaker by possible new FOBTs regulations.
As calculated by Barclays analysts, if a £2 maximum limit is imposed on fixed-odds betting machines, Ladbrokes Coral will see its sales decline by about £449 million in the upcoming year. In case that a maximum stake of £10 is adopted by UK authorities, Ladbrokes Coral is expected to lose about £276 million in 2018.
FOBTs Crackdown Would Hit William Hill, Too
Over the last few years, William Hill has been suffering some financial losses due to relatively weak performance of its operations in the country. Previously, the gambling operator has even openly blamed stricter regulatory regime for declining revenues and closure of some of its betting shops, putting hundreds of jobs at risk. A possible crackdown on fixed-odds betting terminals would be another severe blow to the suffering bookmaker, stripping it of its FOBTs-generated profits over the upcoming years.
Analysts at Barclays have said in a recent report that in case that the UK Government decides to impose restrictions on fixed-odds betting terminals, William Hill is to lose about £182 million over the upcoming year in case that the maximum stake allowed on FOBTs is reduced from £100 to £10.
Paddy Power Betfair to Be Hurt by FOBTs Clampdown
As being one of the large bookmakers that currently operate on the territory of the UK, Paddy Power Betfair is also to be seriously hit by the possible crackdown on FOBTs. Barclays Analysts have calculated that if the Government decides to reduce the current maximum stake of £100 to as much as £10, the company would lose £32 million in fixed-odds betting machines-generated revenue in 2018.
As reported by The Financial Times, Paddy Power Betfair executives have shared their concerns related to hiring staff, as less workers were willing to join a company that could suffer serious financial losses due to industry crackdown. The company has also protested against a possible FOBTs maximum stake reduction, saying that such a clampdown would have a serious negative impact on the entire industry.
Conclusion
Everyone in the industry have their eyes on the upcoming UK Government’s review of fixed-odds betting terminals, as a possible crackdown would most likely change the industry forever. The truth is that such a step would seriously shake the local gambling market, and could provoke a massive wave of mergers and acquisitions, as UK gambling companies would seek consolidation in order to deal with the unfortunate consequences of the FOBTs crackdown.
On the other hand, the UK Government must do something to guarantee players’ safety, as it is clear that the self-exclusion scheme is not enough to prevent the negative impact of gambling machines on local customers.
- Author
Olivia Cole
