UK government uncertainty over FOBTs causes more doubt for industry

UK Government FOBT

The fact that the UK authorities have once again delayed a decision on FOBT stake levels means more uncertainty and potential infighting for the sector, writes Dominic Gates.

Waiting for a decision from the UK government on whether it will reduce stake levels on the much-maligned fixed odds betting terminals (FOBTs) can be a bit like waiting for a three-legged goat. In the end one wonders if it will ever happen – although, in this case at least, happen it will, the FOBT-related amendment that is.

When the Department for Culture, Media and Sport published its long-awaited announcement on FOBTs in the shape of the Triennial Review at the very end of October, having already delayed publication for some months, it said FOBT stakes should be reduced from the current maximum £100 to within a range of £50 to £2, and that it had decided to launch a 12-week consultation of all stakeholders to determine the level of said reduction. Talk of fudge and damp squibs quickly cropped up across social media, but of course the issue is never that simple.

Problem gambling charities and advocacy groups would like to see it dropped to a maximum stake of £2, while the industry, although accepting that it will drop, will lobby like mad to see it reduced to closer to £50 (or as high as it can get).

Should they be reduced to £2 a major operator such as Ladbrokes Coral could lose some £437m in revenues, while for William Hill the amount would be around £288m, according to the Financial Times.

Such figures merely reveal the scale of what is at stake (no pun intended) for the industry, which generated revenues of £1.8bn from FOBTs last year. That the bookmakers accept that they have lost the argument and public relations battle and that the stakes will drop is clear, nonetheless, all industry parties will be lobbying intensely over the next 12 weeks.

For the government, there are the simple arithmetics at play. FOBTs generate substantial tax revenues, hence the consultation period, which, with admirable timing, also allows Chancellor Philip Hammond to key in the 25% in taxes the Treasury will be able to rely on from the £1.8bn generated by FOBTs for his 2017-18 Autumn Budget due out in a couple of weeks (the actual tax amount comes to around £450m).

Half a billion pounds in government funds is not to be sniffed at, even more so when taking into account all the Brexit-related uncertainty the UK is currently facing.

Word is that Prime Minister Theresa May, who has always disapproved of gambling on a moral level (although not when it comes to general elections clearly), is keen to drop the stake level to £2, with Hammond simply thinking about the numbers. Debate has raged at the highest levels of government over this and it will be interesting to see how it all pans out.

Anyway, the review has been going on for two years already, so waiting another three more months shouldn’t be too much of a problem.

Lobbying matters, internal battles

In the meantime, we can look forward to another three months of submissions to DCMS. What that will mean in practice will be lobbying and positioning from different trade associations and we should expect some bickering and unhelpful briefing between them all and against one another.

In simple terms this is because BACTA, the amusement and arcade trade body and the Casino Forum, representing the major land-based casino groups, are not allowed to run FOBTs on their premises and for years have been lobbying against the Association of British Bookmakers, whose members (William Hill, Betfred, Ladbrokes Coral, Paddy Power and so on) profit so handsomely from the FOBTs in their betting outlets.

The other important point is that not only do the different stakeholders brief against one another in a way that is unhelpful and sends out a confused (and confusing) message, but when one group mentions the possibility of sending an industry-wide message, the other trade body usually says something like: ‘Ok, but we’ll only do it if you do it first’, and stasis ensues.

Yet there was a unified marketing campaign against what industry detractors suggested were games and marketing designed to appeal to under-18s.

In a show of unity, the UK Gambling Commission, the Advertising Standards Authority, the Committee on Advertising Practice and the RGA warned operators in the UK that such marketing and content might fall foul of the rules against appealing to children.

The irony, or hypocrisy of the situation depending on your outlook, is that gambling operators have always and still are using design themes and imagery that will appeal to children. One just needs to go to a gambling trade show or affiliate event to see candy-coloured or super hero-themed games on display.

How to get ahead in advertising?

This targeting may not be deliberate, but the imagery is there because it looks trendy and current, regardless of what the suppliers and operators do or say publicly.

For all that, the overriding reason the big industry players are embarking on these corporate responsibility manoeuvres is because they are petrified the Gambling Commission will revoke their licences. Speaking to contacts in the sector, the Commission has apparently made it plain that it is only interested in going after the top-level operators.

This doesn’t mean the smaller groups can do what they like, just ask bingo and casino operator BGO, but nonetheless it throws into sharp relief the Commission’s intent and how those major gambling companies must ensure they do not fall foul of it.

Speaking of BGO, its most recent TV campaign promised an end of to the much-criticised practice of demanding near-impossible wagering conditions to satisfy bonus requirements.

BGO’s move should be commended, but as ever in such a ‘controversial’ industry, contemporaries and anti-gambling opponents alike will find ways of criticizing it.

However, having done this off its own back, BGO once again shows how disjointed the industry is at addressing its most challenging issues.

For you players it should mean fairer rules and better advertising and, hopefully, corporate responsibility practices; and the one organisation that can take the credit for that is the Gambling Commission.