The General Election in May makes 2015 a pivotal year for the UK gambling sector. The introduction of fixed-term parliaments mean that the events of the next few months will determine the fortunes of gambling operators until the end of the decade. Gambling is becoming a key topic in the election battle and in particular the contentious issue of fixed-odds betting terminals (FOBTs).
Fixed-odds betting terminals are gaming machines primarily located in high-street betting shops in the UK. They allow customers to play casino and slot games in betting shops and roulette is by far the most popular game on the FOBTs. Each betting shop is permitted a maximum of four machines.
In 2002 Ladbrokes recorded an annual gross win per shop from machines of GB£ 26,107. By 2013 this figure had risen to GB£ 190,498. Ladbrokes’ high-street rival William Hill had total gross win from machines of GB£ 20.9 million in 2002, which had risen to GB£ 440.0 million in 2013. FOBTs have clearly been a reason for much of the growth in betting shop revenue over the last decade and FOBTs now account for the majority of revenue earned by some retail betting firms. But the increase in the number of machines installed and the revenues that betting operators earn from them has drawn criticism from anti-gambling campaigners, politicians and sections of the media.
Opponents of the gaming machines claim that betting shops are being “clustered” in poorer social areas and with the betting shops come the FOBTs. It is argued that betting firms are targeting those sectors of the population that can least afford to lose money gambling on the FOBTs. Needless to say, politicians have had their say on the matter.
It was the previous Labour government that made changes to the UK’s gambling regulation through the 2005 Gambling Act. But in 2012, when in opposition, Labour’s deputy leader Harriet Harman admitted that her party’s legislation had not had the result that was intended.
The current Conservative-led coalition government sees political advantage in the fact that it was the Labour party that allowed FOBTs to develop in the first place. Speaking recently, the Conservative Lord Gardiner of Kimble reminded his fellow peers of exactly that fact. He said: “In 2000, there were no FOBTs and by 2010 [when the Conservative coalition came to power] there were 30,000 FOBTs. That is the situation that this government now seeks to address. The deputy leader of the Labour party has admitted that what happened was a mistake, and we are now dealing with that”.
So far, the current government has taken a few steps to try and curb the proliferation of FOBTs. One of the most substantial changes was the announcement in the 2014 Budget that the rate of duty on FOBTs would be increased from 20% to 25%. This new rate of machine duty comes into force on 1 March 2015. For the likes of William Hill the higher tax rate could mean an extra GB£ 20 million in costs. The company said it would close 109 of its betting shops in 2014 because of the increase in machine duty.
A second measure introduced is the requirement that a betting shop customer wishing to stake over GB£ 50 on a FOBT will be required to interact with shop staff. There will be a maximum limit of GB£ 50 per spin for unidentified customers. A customer wishing to stake up to GB£ 100 on the machines must either use account-based play or load cash over the counter. The intention behind these measures is to try and address the issue of problem gambling. It is claimed, although not proven, that FOBTs are a particularly addictive form of gambling. With less than 10% of FOBT customers staking above GB£ 50, however, the effectiveness and impact of these new measures could be limited.
Alongside the fiscal and staking measures, there are also proposals to prevent the number of FOBTs being installed from increasing any further. Part of the impetus for this new regulation actually came from the Scottish Referendum in 2014. During the referendum campaign the political leaders in Westminster panicked when the polls suggested the Scottish population would vote in favour of leaving the UK. The party leaders, therefore, all promised to give more powers to the Scottish government if voters chose to stay as part of the United Kingdom.
74. The Scottish Parliament will have the power to prevent the proliferation of Fixed-Odds Betting Terminals.”
The report does not elaborate as to what exact form these powers will take but the statement is clear enough in its intention. One measure might be to prevent any new betting shops from installing FOBTs.
But the fall-out from the Scottish Referendum has now spread to England. English councils have demanded similar powers to Scotland when it comes to restricting FOBTs. In December 2014 the Local Government Association (LGA), which represents English councils, set out various changes to licensing laws it wished to see made:
Cllr Tony Page, LGA Licensing Spokesman, explained “Concerns about betting shop clustering and proliferation of high-stake FOBTs do not stop at the border [with Scotland]. English councils must be handed the same powers being promised to their Scottish counterparts to tackle these issues. Councils are not anti-bookies but many are frustrated by limited powers available to them to act on community concerns and limit the number of shops opening up in their area. A new cumulative impact test would rightly give councils the power to veto new shops in areas already saturated by betting shops if firms can’t prove a new shop would benefit the local economy.”
Criticism of FOBTs has also come from other areas of the UK gambling sector, keen to lobby for their own interests. Simon Thomas, owner of the London Hippodrome casino, argued “It was always accepted that gambling which had the highest stakes and prizes should be the most heavily taxed and regulated, and that casinos were the right place for this. But now we have a situation where betting shops – which often have just one staff member in the shop – have fast, high stakes machines with little supervision. It’s insane. Nowhere else in Europe are such machines allowed on the high street – they’re banned in many countries altogether – and are ruining people’s lives”.