The UK government is facing a backlash for what many see as an entirely unnecessary delay in implementing their plan to reduce the minimum stakes for fixed odds betting terminal (FOBTs) from £100 to £2. The Chancellor Philip Hammond is set to use next week’s budget to announce the delay to the introduction of new rules and regulations until October 2019.
Even before the announcement has been made, Hammond is under intense pressure to scrap these plans.
In May, the government announced that it was to accept Gambling Commission recommendations for a new £2 stake limit which would be in place by next April 2019. A delay until October would represent a six-month delay on the initial proposed start date, but swifter implementation than a 2020 launch that was mooted earlier in the year.
The reduction in the maximum stake is expected to cut around £457m each year in tax from Treasury nets, which some believe may be influencing the delay.
No Justification For Delay
The All Party Parliamentary Group (APPG) have immediately responded by saying that there is no justification for the delay and points the finger at misleading claims from bookmakers over how long it will take for their shops to adapt to the changes, the reasoning cited for the proposed delay. Although, as many have been quick to point out, bookmakers are expected to rake in some £1.6 billion in that period.
A spokesperson for the APPG has criticised the Treasury over the move;
“The FOBT All Party Parliamentary Group has just undertaken an inquiry looking at the need to implement the stake reduction on FOBTs. Its report is due to be published this week. The Group has found there is no justification for delaying the stake reduction on FOBTs and this should happen as soon as possible, and no later than April 2019, to prevent further harm to vulnerable people and at risk gamblers.”
Carolyn Harris, chair of FOBT APPG, added;
“From the evidence we heard, it is clear to us that the bookmakers are being misleading and disingenuous to claim such a long time is required to make the technical changes to FOBT machines. Clearly the profit they make from FOBTs provides an incentive to delay the reduction as long as possible.
The harm being caused by FOBTs cannot go on. It is now time for the Government to do the right thing. It is time for it to stop bending to the will of a large corporate interest, namely the bookmakers, and implement a £2 stake on Fixed Odds Betting Terminals now.”
Bookmakers Face Shop Closiures
Numerous bookmakers have warned that the cuts will inevitably lead to wholesale shop closures and job losses across the gambling industry. Indeed, shares did take a hit across the sector initially, although some of the stock losses are beginning to recover.
William Hill, who have been accused of encouraging people to bet with higher stakes while they are still permitted, dipped to as little as 9% before recovering slightly, while Ladbrokes Coral owner GVC Holdings and Paddy Power Betfair fell to 7% and 5% respectively before also making small recoveries.
William Hill have admitted that the decision, which they note as unprecedented, could result in around 900 of its betting shops become loss-making, with a number at a definite risk of closure as groupwide annual earnings are hit to the tune of between £70 million and £100 million, leaving them at risk of a foreign takeover. Hills admission comes as the Association of British Bookmakers forecast the closure of more than 4,000 shops along with the loss of 21,000 jobs.
Philip Bowcock, William Hill CEO, said;
“The Government has handed us a tough challenge today and it will take some time for the full impact to be understood, for our business, the wider high street and key partners like horse racing. We will continue to evolve our retail business in order to adapt to this change and we will support our colleagues as best we can.”
GVC have echoed this grim forecast, saying that it expected profit to be cut by around £160 million, while Paddy Power Betfair warned its gaming revenues were likely to be reduced by between £35 and £46 million.
Kenneth Alexander, chief executive of GVC, said;
“Although we are ultimately disappointed with the outcome of the Triennial Review, it is a decision we accept. The uncertainty has weighed heavy on the industry and the many thousands of people who work within it. Our focus now is to work with government to build a constructive relationship that will ensure a positive future for the sector.”