Report: FOBT Drama Has Created Social Responsibility “Fit For Purpose”

The cut in maximum stakes for FOBTs has created a “fit for purpose” social responsibility, says new report.

30-second summary

  • Report says stake reduction at fixed odds betting terminals (FOBTs) is already working
  • Measures put in place have created social responsibility deemed “fit for purpose”
  • Bookmakers reporting losses of up to £722m with FOBTs to blame
  • Maximum stake reduction to just £2 starts on April 1

The discussion about fixed odds betting terminals continues, with bookies continuing to lose out. A new report says that the theory behind the drastic cut is working even though the start date is not until next month.

Going further, the Regulatory Policy Committee (RPC), a body which scrutinizes all government decisions, has said that the shocking decision has instead created social responsibility that is “fit for purpose.”

Potential to lose thousands in minutes

When the Department for Digital, Culture, Media, and Sport (DCMS) announced the reduction in FOBTs last year, the UK had a total of 33,611 machines, but only 191 were in casinos. This created a lavish industry for the high street bookie where the machines allowed maximum stakes of £100 ($137.20), with the potential to lose thousands of pounds in just minutes.

Next month that stake will become just £2 ($2.75), which the industry is already blaming to stagnant sales. William Hill alone announced losses of £722m ($958m) in 2018 and has insisted that the new measures are to blame.

Losses not as severe as predicted

However, the new report from the RPC says that the gross gambling yield losses may not be as severe as predicted, because players may choose to gamble for longer at lower stakes. The number of sessions in play is actually estimated to increase by 28%. This is balanced by a possible 10% reduction in the number of players.

The report has used information from a recent study conducted by the Institute for Public Policy to demonstrate the consequences that gambling has on society.

With the news from the Centre for Economics and Business Research (CEBR) suggesting that FOBT players were costing themselves and their families £1.5bn ($2b), this hefty change has dominated the media over the last 12 months.

While the DCMS was unable to substantiate these estimates, they heard from a number of families while conducting their research and making their final shock decision. The CEBR report ultimately recommended that potential reductions in gambling-related harm in terms of health, welfare, employment, housing, and criminal justice services may be between £430m ($580m) and £1.3bn ($1.7bn) annually.

What’s next?

The FOBT crisis is certainly not going away. If anything, it has shone a spotlight on high street gambling that will be monitored and evaluated over the next few years as the DCMS accumulates data. They have said that this will allow an even closer relationship between the body and the Gambling Commission. The report even suggests that the DCMS is monitoring the potential impact of electronic, notes, and coin payment methods on staking behavior.

It is believed that the introduction of the limited stakes will cost the industry £540m ($716m).

William Hill plunges into £722m loss 

One such casualty already announced is the bookmaker William Hill, who reported a loss of £722m ($958m) for 2018, compared with profits of £147m ($195m) the previous year.  William Hill has publicly blamed the introduction of the £2 ($2.75) max stake that is due to take effect on April 1.

It was previously scheduled to start in October 2019 but it was acknowledged that Parliament wanted the £2 stake implemented sooner.

While the bookies have threatened that hundreds of high street shores could now be at risk of closure, their chief executive, Philip Bowcock, has called for caution. He said, “The next few years will require careful navigating and investment, but with a clear strategy and diverse, experienced leadership teams in place we are ready to capitalize on the opportunities available to us.”

William Hill is not the only company facing a different future due to new gambling regulations. Rivals Ladbrokes Coral, Betfred, and Paddy Power have all suggested that the FOBTs ruling will affect them with varying degrees of severity.


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