Bookmakers in the UK have urged the government to reconsider plans to put betting limits on FOBTs.
Top UK betting companies have sent a letter to Matt Hancock, the Secretary of State for Digital, Culture, Media and Sport (DCMS) in an effort to curtail government plans to implement a £2 ($2.75) wagering limit on fixed odds betting terminals (FOBTs). The letter was supported by senior officials of William Hill, Jenningsbet, GVC Holdings, and Scotbet. Betting companies in the UK feel that reducing the limit would have drastic consequences for the industry.
The letter sent to Hancock states: “As the chief executives of UK retail betting shops we would like to express our alarm that, according to media reports, the government has determined that the maximum stake on betting shop gaming machines should be reduced from £100 [$137] to the lowest possible level of £2.”
The letter goes on to say: “We acknowledge that the government is committed to reducing the maximum stake; however, this should be a proportionate response and consistent with the evidence.
“For the avoidance of any doubt, we believe a £2 maximum stake is a disproportionate response and will be catastrophic for retail betting in the UK, with widespread consequences for people’s livelihoods and the wider economy.”
Job losses and shop closures
This is not the first time bookmakers have warned the Department of Digital, Culture, Media and Sport about the potential job losses and shop closures that could occur as a result of a lower betting threshold. Currently, the maximum betting limit is set at £100, and the proposed £2 would be a drastic change.
Leaders in the industry have pointed out that KPMG, a financial auditor, completed an analysis of the proposed changes and estimated that more than 20,000 jobs would be lost, as half of the betting shops in the United Kingdom would shut down.
Bookmakers in the UK are being represented by the Association of British Bookmakers and are seeking an open dialogue with the Department of Digital, Culture, Media and Sports. The hope is that a solution can be found that will be positive for all stakeholders.
What’s at stake?
Throughout the month of April, reports have surfaced covering the decision by the government to change the limits on FOBT machines. It was believed a decision on the matter would be suspended owing to concerns within the Treasury about a long-term industry tax shortfall. Yet, just last week, Chancellor Phillip Hammond reportedly stated he was willing to approve the £2 cut, showing support for the UK Gambling Commission’s recommendations for policy changes within the industry.
News of Hammond’s willingness to go along with the betting limit decrease led to a huge drop in the share prices of major UK betting enterprises. William Hill was down as much as 14% while GVC Holdings dropped 7%.
The end result of the betting limit change would be that top bookmakers would feel deep losses. Betting operators would see a major decrease in operations as well as profits. GVC Holdings is set to potentially lose as much as £430m ($591m) in corporate revenues that are generated via FOBTs. Currently, GVC operates Ladbrokes Coral’s more than 3,000 retail betting shops in the UK.
William Hill would also be greatly affected by the betting limit change as they rely on FOBT operations. The company earns more than 50% of its retail revenues from the betting machines.
In addition to job losses and falling revenue, bookmakers have also pointed out that they would have to cut back on sports sponsorships and marketing spending if the drastic change is made to FOBT machine betting limits.