The UK government has reduced stakes on fixed odds betting terminals from £100 to £2 in the hope of reducing the risks that consumers face from gambling - but it will have a big impact on the industry
The £13.8bn gambling industry was dealt a significant blow today as the UK Government confirmed it will cut the maximum stakes on electronic casino games from £100 to £2.
The legislation will affect all fixed odds betting terminals (FOBTs), which were introduced in 1999 and include games such as roulette, and currently enable users to bet £100 every 20 seconds.
Research from March 2017, shows that gamblers lost £1.8bn from FOBTs alone.
The Government’s decision was made after complaints were put forward by anti-gambling campaigners surrounding the machines being extremely addictive, even describing them as the “crack cocaine of gambling”.
Taking decisive action over fixed odds betting terminals
Minister of Sport and Civil Society Tracey Crouch said in a statement: “Problem gambling can devastate individuals’ lives, families and communities.
“It is right that we take decisive action now to ensure a responsible gambling industry that protects the most vulnerable in our society.
“By reducing FOBT stakes to £2 we can help stop extreme losses by those who can least afford it.
“While we want a healthy gambling industry that contributes to the economy, we also need one that does all it can to protect players.
“We are increasing protections around online gambling, doing more on research, education and treatment of problem gambling and ensuring tighter rules around gambling advertising.
“We will work with the industry on the impact of these changes and are confident that this innovative sector will step up and help achieve this balance.”
Tightening protections around online gambling
The Gambling Commission has pledged to toughen up protections around online gambling.
It plans to impose stricture procedures on age verification and consumer spending, who will have to prove they can afford it.
The public body will also be launching a major multi-million pound advertising campaign, which will promote responsible gambling.
Bookmakers feel the impact
When the decision was announced, bookmaker William Hill’s shares declined by 12% and Ladbrokes Coral’s fell by almost 8%.
Analysts at Credit Suisse are expecting William Hill and Ladbrokes’ earnings to reduce by 40% or 50%, whilst the Swiss bank believes it could lead to around 1,000 betting shops closing down.
In a statement, William Hill said: “The independent experts flagged that a £2 stake far from certain to reduce problem gambling and could push people to more volatile products and less protected environments.
“We are disappointed by this decision, which will have a high price in terms of shop closures and jobs.
“William Hill supported a number of measures, including a ban on televised gambling advertising around football before the watershed and a proportionate stake cut on machines as part of our input to this review.
“We have always been committed to minimising harm caused by gambling and will continue to evolve our approach in retail and online.”
It will have an economic impact on the government
As well as the economic impact on bookmakers, it will also have a significant affect on the Government’s economy, believe academics.
Professor Leighton Vaughan Williams, director of the Betting Research Unit at Nottingham Business School, part of Nottingham Trent University, said: “Inevitably it has an economic affect on bookmakers and will also have an effect on the Government.
“The Government taxes these machines at 25% - they take £1.8bn a year. They won’t all go, but takings will decline significantly.”
The same decision is yet to be put forward for online betting, Prof Vaughan Williams pointed out.
He added: “There’s nothing in this announcement that says they’re going to crack down with online gambling.
“Consumers can still put down a bet of a lot more than £100 a spin.
“The alternative to this legislation would have been to increase tracking on users’ cards so people need to use their debit cards and you can track anyone who is a problem gambler and exclude them.”