Racing bracing itself for £50m hit if FOBT stake is reduced to £2

As the betting industry makes a last-ditch effort to persuade the government not to reduce the maximum stake on FOBTs to £2, racing is working on the basis the financial impact of such a move could wipe as much as £50 million a year from the sport's finances.

The government's decision on how much it will reduce the stake on the controversial machines is expected after this week's local elections.

Options ranging from £2 to £50 from the existing maximum of £100 were set out in the review, but in recent days the betting industry's nightmare scenario of £2 has looked increasingly likely, with chancellor Philip Hammond reportedly dropping his objection to such a move.

Bookmakers have warned that a £2 stake would lead to thousands of betting shops closing, with racing losing millions of pounds of income as a result from lost media rights and levy.

When it was reported earlier this year that culture secretary Matt Hancock – the minister with ultimate responsibility for gambling – favoured a £2 stake, Arena Racing Company chief executive Martin Cruddace said it would have a "catastrophic" effect on British racing's finances with more than £50m being lost, much of which would come from prize-money.

Jockey Club group chief executive Simon Bazalgette, speaking as the body released its results for 2017, said the industry was working to that £50m figure.

"That's the kind of number we all expect, but we'll have to see what happens in reality, there are all kinds of scenarios," he said. "But those numbers are in line, I think, with what horseracing is using in general."

He continued: "It's obviously a cloud on the horizon but we'll have to deal with it when it comes. I think the key thing for us is, while we have the opportunity to keep investing, to make sure we're as resilient as we can be as and when that happens, and if it has a financial impact on the sport.

"As we all know, it could have potentially a very large impact. If anything it means we have to really focus on our game and make sure we're getting value for money and investing for the future out of what we're doing."

Betting industry chiefs have written to Hancock in the hope of persuading him not to impose a £2 cap on the machines, which make up more than half of betting shop profits but have been blamed for causing problem gambling and other social issues by their opponents.

Among them was Greg Knight, managing director of independent firm Jenningsbet, who warned a £2 stake would lead to "at best" half his 100 betting shops closing with the loss of 250 jobs, as well as hitting racing's finances.

"I desperately urge you to think again and pull businesses like mine back from the brink," Knight's letter concluded.

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