'Punters are voting with their feet' - bookmaker warning on new FOBT limit

Curbs on fixed odds betting terminals will put independent bookmakers "under tremendous pressure" according to one operator as high-street firms assess the impact of the new regulations.

Another independent bookmaker said turnover and income were "well down" after the maximum stake on the betting office gaming machines was reduced to £2 from £100 at the start of the month, a move bookmakers have claimed will lead to swathes of shops becoming unprofitable and the loss of thousands of jobs.

The machines have become hugely important to the sector with the latest Gambling Commission statistics putting their gross gambling yield – the amount bookmakers retain after winnings have been paid out – at £1.8 billion.

It has been suggested that the gross win of bookmakers on the machines has fallen by up to 45 per cent since the change came into effect.

Greg Knight, the managing director of Britain's biggest independent betting shop chain Jenningsbet, warned customers had already begun to "vote with their feet".

Kenny Alexander: GVC Chief ExecutiveCredit: Kathleen Sarg

"If the first week is any true indication of the level that we will eventually settle at then the independent sector will be under tremendous pressure and overall the estimate of 3,000 shop closures will be pretty accurate," he said.

"We are seeing an uplift in over-the-counter bets but it's really hard to gauge because the Aintree meeting did not fall in the same week last year so year-on-year comparisons are futile. We are definitely seeing people vote with their feet."

Fellow independent Howard Chisholm said the performance of gaming machines following the introduction of the new maximum stake had gone as predicted.

"Turnover and income is well down compared to pre-April 1, which was to be expected," he said.

"Most customers find it hard to believe the changes that have taken place, it will take them a while to convert to the new world.

"That said, the levels of business are not out of line with what we might have expected and it appears that gaming machine business is increasing day-on-day as customers adjust to the new reality."

Chisholm, who does not have SIS's service in the majority of his shops, added that over-the-counter business was much the same as before although interest in virtual racing appeared to have increased.

"This would seem logical since the gaming machine customer looking to bet in amounts more than would buy a large packet of crisps is going to look for a similar product that is engaging and entertaining," Chisholm said. "Virtual racing fulfils that requirement."

GVC Holdings, the parent company of Ladbrokes Coral, has predicted the stake cut could wipe £135 million from earnings in 2019, while William Hill indicated it would reduce their profitability by £70m-£100m. The smaller Paddy Power chain said it would reduce their earnings by £30m.

However, a number of firms have insisted it will take some time to learn the true effect of the curbs on their business.

Last Friday GVC's chief executive Kenny Alexander noted in a trading update: "We expect it to be several weeks before we can start to assess the impact."

Betfred spokesman Mark Pearson echoed that sentiment this week, saying: "It is far too early to comment."

High street firms have trialled new products in an attempt to retain customers, but in the case of Betfred and Paddy Power those trials have led to intervention from the Gambling Commission.

The two firms both withdrew roulette-style games following a warning from the commission and could still face action as the regulator continues its investigations.

Labour's deputy leader Tom Watson wrote to ministers asking what action they would take in response to what he described as "new high-stakes roulette-style games in betting shops".

Minister Mims Davies: Government expects bookmakers to comply with spirit and letter of the lawCredit: Mims Davies

Mims Davies, the minister with responsibility for gambling, replied this week saying: "The government and the Gambling Commission expect the industry to comply with both the spirit and the letter of the new regulations to ensure that consumers continue to be protected from harm."

She also said the government was "committed to robustly monitoring and evaluating the impact of the regulatory change," in response to another question from Watson asking what plans had been made to assess gambling behaviour, product displacement and harm mitigation following the stake reduction.

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