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Monday, 22 October, 2018

Boost for bookmakers as regulator declines to recommend £2 FOBT stake

FOBTs: it is believed the Gambling Commission will not explicitly back a maximum £2 stake
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Betting shop operators received a major boost on Monday as Gambling Commission advice to culture secretary Matt Hancock on the government review of gambling fell short of the industry's doomsday scenario of a £2 maximum stake for fixed odds betting terminals (FOBTs)

The commission, the government's adviser on gambling matters, has recommended that the maximum stake on FOBTs, which account for more than half the business that takes place in betting shops, be reduced to £30 or less.

Shares in William Hill and Ladbrokes Coral rose on the back of the news, which also prompted an angry response from those who have campaigned for a £2 maximum stake, blaming FOBTs for problem gambling and other social problems.

The watchdog will not explicitly back a maximum £2 stake on FOBTs, which bookmakers claim would lead to thousands of betting shop closures and millions of pounds of lost income for racing, instead recommending measures to combat the risk of harm to gamblers.

Gambling Commission executive director Tim Miller said: "We're aiming to reduce the risks that people face from these forms of gambling.

"A stake cut is an important part of our comprehensive package that is recommended to government that will tackle the risks consumers face, but our research has shown that a stake cut alone will not do enough.

"If the government wants to go lower than a £30 maximum stake that will be perfectly consistent with our advice, as we are recommending a maximum stake of £30 or less."


Recommendations from the report include . . .

  • The stake limit for FOBTs non-slot games, including roulette, should be set at or below £30 if it is to have a significant effect on the potential for players to lose large amounts of money in a short space of time
  • The FOBTs slots games stakes should be limited to £2
  • Banning the facility for machines to allow different categories of games to be played in a single session
  • There is a strong case to make tracked play mandatory across certain machines
  • Forms of player protection should be extended across machines
  • Working with the industry and others on steps to make limit-setting more effective – this could include ending sessions when consumers reach time and money limits.

Miller added on Radio 4: "We could have advised a maximum £2 stake, but the evidence did not point to that and show a clear figure.

"For many people it would help them to be restricted to a £2 maximum stake, but for some people there is a risk that if they can bet smaller amounts they can spend longer playing and engage in riskier behaviours, which is why we are advising this comprehensive package of recommendations.

"By tracking customers' play, gambling companies will have much less excuse not to intervene as they will be able to spot the early signs of problem gambling.

Tim Miller: "For some people there is a risk that if they can bet smaller amounts they can spend longer playing"

"Our focus is on protecting vulnerable people from harm. We have no duties to consider the economic wellbeing of the industry."

The commission's recommendations include a ban on allowing FOBT players to switch quickly between betting on high-stake and low-stake games every 20 seconds. Bookmakers will be recommended to track customers' habits on FOBTs too.

The commission also wants the government to improve player protections on FOBTs, including allowing customers to set time and loss limits, while they will also recommend that slots games, which account for one in every 200 bets on FOBTs, will be reduced to a maximum stake of £2.

ABB: 'We fully understand public concern'

Commenting on the announcement, the Association of British Bookmakers said in a statement: "The ABB is now considering the extensive and wide-ranging advice and recommendations made by the Gambling Commission. We fully understand that there is public concern and that there will be a stake cut to reduce the levels of losses on machines in betting shops.

"The commission has also identified a number of responsible gambling measures that will benefit those experiencing problems with their gambling. The final decision is still to be taken and we await the outcome of the consultation.

"In the interim, we remain committed to introducing further measures to address problem gambling and will continue to work with all interested parties."

The commission's advice was welcomed by government but not by the opposition.

A Department for Digital, Culture, Media and Sport spokesperson said: "We welcome the Gambling Commission's advice and will be considering it alongside responses to our consultation before making a final decision.

"We have been clear that FOBT stakes will be cut to have a safe and sustainable industry where vulnerable people are protected."

Advice 'simply passes the buck'

Hancock's Labour shadow Tom Watson was critical of the commission's advice.

He said: "Today's Gambling Commission's recommendation that the maximum stake on fixed odds betting terminals be reduced from £100 to £30 or less does not go anything like far enough. It simply passes the buck to ministers.

Tom Watson MP: "I fear they will kowtow to the powerful lobbying of the betting industry"

"But, if we are to tackle the hidden epidemic of gambling addiction in this country, we need decisive action. We need to reduce the maximum stake on electronic casino games like roulette to £2, and introduce slower spin times.

"I sincerely hope ministers do the right thing, but I fear they will kowtow to the powerful lobbying of the betting industry, which generates £1.8bn a year by putting the health of its profits before the health of its customers."

BHA 'supports consultation objectives'

There have been estimates within racing that a £2 stake could cost the industry £55 million a year in lost income from levy and media rights.

Reacting to the commission's announcement BHA media manager Robin Mounsey said: "We note the advice to government from the Gambling Commission and await the outcome of the consultation.

"The BHA fully supports the government’s consultation objectives of achieving a balance between a gambling sector which is socially responsible and does all it can to protect consumers and communities, and which can grow and contribute to the economy."

Bookmaker share prices rise

Shares in William Hill rose nearly six per cent to 339.3p on Monday, while Ladbrokes Coral shares were up by nearly two per cent to 173.55p.

The recovery takes the share price of these firms back around the level they were at before The Times report in late January that said Hancock was favouring a £2 maximum stake.

That rumour resulted in £320m being wiped off William Hill's market capitalisation, while Ladbrokes Coral lost £300m from their value. 

Analysts at Goodbody said in a note: "It is important to set out that this is not the final decision on machines and represents the Gambling Commission's recommendations to the DCMS.

"We would also note that this issue remains highly political for the DCMS and government. However, the recommendations of the GC will be better than what a lot of people would have expected and will be seen as positive for retail betting operators."


What happens next

  • Ministers at the Department for Digital, Culture, Media and Sport decide on stake levels and other measures
  • The DCMS then writes round to other affected departments who then feed back their views
  • DCMS announces final decision
  • Both houses of parliament vote on a statutory instrument containing the government's plans
  • If passed then new stake and measures are implemented, possibly in late 2019, if not the status quo is maintained and the process starts again

FOBTs - the story so far

1999 Fixed odds betting terminals are first introduced to British betting shops. There are no limits on numbers and where they can be placed.

January 2003 The government expresses concern at the "increasing installation" of FOBTs in betting shops.

November 2003 Legal action between the Gaming Board - the Gambling Commission's predecessor - and the Association of British Bookmakers to test the legality of FOBTs is settled out of court. A code of practice limiting the number of machines to four per betting shop, setting maximum stakes at £100 and maximum prizes at £500 and limiting speed of play is introduced. Culture secretary Tessa Jowell says FOBTs are "on probation".

April 2005 The 2005 Gambling Act receives Royal Assent. FOBTs are categorised as B2 machines under the act which provides a new framework for gaming machines including powers to prescribe maximum limits for stakes and prizes and the number of machines permitted in different types of premises.

2012 Campaign For Fairer Gambling formed and goes on the launch the Stop The FOBTs campaign.

July 2012 Culture, Media and Sport select committee report recommends that local authorities be allowed to lift the cap on gaming machine numbers to prevent 'clustering' of betting shops. It is not adopted by government.

March 2013 Chancellor George Osborne introduces machine games duty on FOBTs at a rate of 20 per cent.

September 2013 The Association of British Bookmakers launches its new Code for Responsible Gambling and Player Protection which includes machine players being able to set their own time and monetary limits, as well as mandatory warnings being displayed on screen when certain limits are breached

October 2013 Following the Triennial Review maximum stakes for FOBTs are left unchanged although minister Helen Grant says their future remains "unresolved".

Later in the month prime minister David Cameron tells parliament he thinks it is "worth having a proper look at the issue" of FOBTs.

March 2014 Osborne shocks betting shop operators by raising machine games duty to 25 per cent.

April 2014 Grant announces new measures for FOBTs requiring customers accessing stakes more than £50 to use account-based play or load cash over the counter.

September 2014 Senet Group launched. Members promise to take gaming machine advertising out of betting shop windows.

December 2015 ABB launches its Player Awareness Systems scheme in an effort to prevent problem gambling among machine players.

October 2016 The much-delayed triennial review is finally launched with a six-week call for evidence, the results of which are expected in spring 2017.

Theresa May: her decision to call a snap election delayed announcement of the findings of the government's review

April 2017 Prime minister Theresa May's decision to call a snap election delays announcement of the findings of the government's review until the autumn.

May 2017 Labour and Liberal Democrats pledge to reduce FOBT maximum stakes to £2 in their election manifestos.

October 2017 Outgoing Paddy Power Betfair chief executive Breon Corcoran breaks ranks to call for a cut in stakes to £10 or less.

Later in the month the government launches another consultation setting out a range of options for FOBTs.

January 2018 A newspaper report claims culture secretary Matt Hancock favours reducing the maximum FOBT stake to £2, leading to warnings about the possible effect on racing.

March 2018 The Gambling Commission publishes its advice to the government on the gambling review, including the recommendation that FOBT maximum stakes for roulette be cut to £30 or less.

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If you were interested in this, you might like . . .

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We could have advised a maximum £2 stake, but the evidence did not point to that and show a clear figure
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