Fixed Odds Betting Terminals: The Furore Continues
The graph below is sourced from the UK’s HM Revenue and Customs (HMRC) and shows the quarterly tax receipts from the entire UK gambling industry. From 2002 you can see a gently rising trend with a significant rise in Q2 2012 which reflects the success of the National Lottery and the Euromillions rollovers during that period.
If so, then the gambling industry would do well to take on board the concept that if one sector does not produce enough income then another maybe asked to take up the shortfall. To many observers the changes to casino gaming duty in 2007 were basically political. It was the then Prime Minister, Gordon Brown, wanting to end the media debacle over super casinos. The reality was different because the bands were changed at the lower end where casinos started to pay duty at 15% on the first £1.8 million and the lower rates of 2.5% and 12.5% were removed.
The result was a higher tax yield for Treasury.
The media coverage on casinos in 2007 stopped with the changes to tax and the abandonment of the super casino idea. Now the debate has moved on to betting shops and their Fixed Odds Betting Terminals (FOBTs or B2 category machines).
The casino industry and also the adult gaming centres (AGCs) have been vociferous about the competition that such machines have introduced to their business. Reading articles in Coinslot and various other trade magazines we see support for the current campaign being waged by Derek Webb.
The Association of British Bookmakers (ABB) has been taken aback, indeed shocked, by the recent publicity being attached to a campaign led by Derek Webb and the Campaign for Fairer Gambling (CFFG).
So what is it that got the press so excited? CFFG claims that you can lose £18,000 per hour on FOBT machines in betting shops. Theoretically you can, just like theoretically you can win the National Lottery.
But to achieve this £18,000 loss per hour it would require a punter to stake £100 on a spin every 20 seconds (180 spins and hour) and lose every penny on every spin. The bookmakers argue the statistical probability of this happening is like a single customer buying a National Lottery ticket each week and winning the jackpot three times in a row – highly unlikely.
Another claim is that bookmakers target poor deprived areas in the locations of the betting shops.
In actual fact bookmakers, like any other business, open shops where there is demand for their services.
They did not open shops in the leafy lanes of Surrey for two reasons. First of all the footfall would not be sufficient to support a betting shop.
Since the inception of the Act in the 1960s Bookmakers have always opened shops in working class areas. It is quite an easy task to prove the point. Get the statistics of shops in the 1960s and mark on a map their location – you will need 15,800 pins. Today you would need only 8,700 pins, such is the fall in the number of shops. In both cases you will see that shops are located in major cities where people live. Why am I explaining this when it seems so obvious?
Let us now assume Mr Webb’s campaign succeeds and stakes and prizes on FOBTs are limited.
Taxes payable to HMRC will fall as the income from FOBTs falls. So who will make up the shortfall?
Not the National Lottery. AGCs, casinos, bingo halls and betting – that is who. Be careful what you wish for.