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Wednesday, 21 November, 2018

Bookies may face FOBT crackdown after election bombshell

Theresa May: did not get the large Conservative majority she had been hoping for
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The likelihood that high street bookmakers will face a crackdown on gaming machines appeared to have increased on Friday after the shock news that voters had delivered a hung parliament following the general election.

Both the betting and racing industries were facing uncertain times after prime minister Theresa May's gamble of calling a snap election backfired spectacularly on Thursday.

May is set to form a new minority government with the backing of the Democratic Unionist Party (DUP), but that is far from being the best-case scenario for betting shop operators.

The findings of the triennial review of the stakes and prizes on the controversial gaming machines - also known as Fixed Odds Betting Terminals - had been delayed by the election and were not expected to be released until the autumn.

It was speculated the review would call for a reduction in stakes on the machines from £100 to as low as £10 to £20, but analysts of the sector said on Friday that the election result might mean government making a political decision to cut stakes even further.

Labour and the Liberal Democrats both called for stakes to be slashed to £2 in their manifestos – which bookmakers have claimed would lead to thousands of betting shops closing with serious consequences for the funding of horse and greyhound racing – while members of the DUP have also spoken out against them.

Analyst David Jennings says: 'Gaming machines are increasingly controversial with ongoing media scrutiny'

Even with DUP support the Conservatives would have only a small majority in the Commons, and analyst David Jennings of Davy Stockbrokers said: "Passing anything controversial would therefore be a challenge, and gaming machines are increasingly controversial with ongoing media scrutiny.

"It's also worth noting that some Conservative MPs are already on record as calling for a £2 staking limit.

"The risk has therefore arguably increased that the next government will make a political rather than an evidence-based decision and that could mean a more severe cut to the maximum stake than is called for in the regulatory review.

"Once the dust settles and the true shape of the next government becomes clear we'll be better placed to comment on the outlook for the sector. As of this morning, however, we'd argue the election outcome equates to a gloomier outlook for the multi-channel operators."

Monitoring developments

William Hill's group communications director Ciaran O'Brien said the firm was monitoring developments following the election but called on government to make a decision based on evidence.

"As and when the DCMS [Department for Culture, Media and Sport] team re-engage with the triennial process we'll continue to work with both the department and ministers as appropriate," he added.

"Ministers have always stated the process will be evidence-led, and we fully expect that to continue to be the case.  

"We will accordingly reiterate to government the lack of the association between stake size and problem gambling, and the drastic economic impact of an unwarranted reduction in terms of shop closures, job losses and a resultant loss of income to both Treasury and horseracing."

Ladbrokes-Coral and William Hill shares fell by two per cent and 2.5 per cent respectively on Friday but shares in Paddy Power Betfair, who have a much smaller betting shop estate, rose by 1.5 per cent.

Racing facing uncertainty

For racing the election result means the uncertainty over what impact Brexit will have on issues including horse movement and immigration is set to continue.

While the previous government passed reform of the levy - racing's central funding system - to extend it to all operators taking bets on the sport, further changes which would put the sport in control of how that money is spent still need to go through parliament.

The BHA was keeping its own counsel on the election result on Friday, although it is understood it has continued discussions with the DCMS during the election period.

While uncertainty over Brexit has increased following the election, a statement released by the European & Mediterranean Horseracing Federation, which represents 28 racing authorities, said there was consensus that the UK's decision to leave the European Union should not interfere with free movement of racehorses and breeding stock.

EMHF chairman Brian Kavanagh said: "Brexit is the biggest challenge to face the European horseracing and breeding industries in a long time.

"The sophisticated and effective processes we've developed over the years for the movement of horses and people throughout Europe shouldn't be taken for granted and it's imperative that the interests of the thoroughbred racing and breeding sector are taken into account during the forthcoming Brexit negotiations.

"It was reassuring to note the unanimous support across all EMHF members for the protection of the current position, which has been hard earned over many years."

The risk has therefore arguably increased that the next government will make a political rather than an evidence-based decision
E.W. Terms
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