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FOBTs and shop closures: a death foretold

Published:

9 Jul 2019

High street bookies closing thousands of shops and causing major job losses is a sad, yet predictable, chapter in the FOBT saga, says Dominic Gates.

700 high street betting outlets closing

The news that the UK bookmaking giant William Hill will be closing some 700 high street betting outlets, leading to the loss of around 4,500 jobs because of the reduction of the maximum stake on fixed odds betting terminals (FOBTs) from £100 to £2 caused tremors among UK newspapers and industry observers last week.

The reasons for the hand-wringing are numerous. In no particular order, anti-gambling politicians and campaigners are satisfied, logically, at witnessing the effects their FOBT stakes victory is having on the likes of William Hill, Coral or Ladbrokes.

They insist that FOBTs and the numerous betting outlets that are often found in some of the poorest parts of British towns are a blight on those neighborhoods; acting as magnets for gamblers who often have addiction and behavioural problems and punters with other social issues.

William Hill’s announcement will likely soon be followed by Ladbrokes, Coral, Betfred and potentially Paddy Power coming out with similar statements about shop closures and their revenues being hit by the loss of FOBT revenues.

William Hill is understood to have lost £800m in the first six months of 2019 because of the drop in FOBT stakes. While it seems like a huge amount of revenue to lose in the space of six months, it’s also something that had been predicted and should have been planned for.

Lack of planning

The reality is that it hasn’t been factored in or prepared for by the operators most affected by it. What this means in practice is that thousands of people, among the lowest earners in the country, will be losing their jobs and the means by which they put food on the table and keep a roof over their heads.

The blame game has already started. Bookies are saying they predicted this would happen when the FOBT stake reduction came in, while their critics are saying they had ample time to prepare for it and should have acted sooner instead of crying wolf months later when the effect was already being felt.

Some of the more cynical critics are saying the operators were just waiting for this moment so they could shut down the shops, cut down on staff costs and move as many of those FOBT customers as possible to their online portals; where they would be able to continue playing high frequency, high stakes casino games in complete anonymity and away from any prying eyes.

The critics add that the solitary and anonymous nature of online play is a further negative factor for players who will not be watched by a friendly shop worker who knows them and their habits. Or their friends will not be around to pop into the shop and, if things get out of hand at the FOBT, put a comforting hand on their shoulder and calm them down.

It is true that humans act differently according to the environments they find themselves in. Being seen and surrounded by people in a physical setting creates social norms and pressures they must adhere to.

However, the horror stories of players totally losing control after losing large amounts of money playing FOBTs show that those parameters just don’t apply in this case.

In addition, the argument about moving players online is old. Operators have been doing it for years and the only reason they are closing the shops is because the returns from FOBTs are simply not there anymore. Whether players part with their money in betting shops or on websites is neither here nor there for the gambling companies.

But should the anti-FOBT, anti-gambling campaigners really be rejoicing at the prospect of thousands of people, often among the lowest earners in our society, losing their jobs? Of course not, and in general they aren’t, but the closures will hit some communities hard.

UK high streets hit by perfect storm

Rather, the ongoing FOBT trauma the UK is experiencing is the result of a number of societal and business trends that have come together to create a perfect storm.

In fact one could even argue that is has been 15 to 20 years in the making; as the gambling industry has focused on lobbying and getting the legislative regime liberalised this has led to thousands of betting shops opening across the country equipped with the four FOBT machines inside that paid for them.

Add to that the rise and rise of online shopping that has decimated so many high streets and before you know it UK shop parades are dominated by bookmakers, cafés and pawnshops.

Compounding the problem, the industry has done nothing constructive to answer the critics and fears caused by FOBTs, instead doubling down on its message that there was no data or evidence that they caused harm. This has led to the stake reduction measure introduced in April and the resulting shop closures, with the industry seemingly helpless to address the issue, even though it has known about it for months.

As has been written before on these pages, it has also foregone any effort to come up with innovative betting products for its high street outlets. This has had a huge impact on the issue as the industry has focused on opening as many outlets as possible to maximise returns from FOBTs and done nothing to develop new sports betting products that would have focused on producing long-term revenues.

This has had a significant impact on players, some of whom have lost huge amounts of money to FOBTS, while the horse racing industry will also have to deal with the fact that it will be losing a major source of funds as each shop contributes £30,000 a year in media rights.

What is clear is that the UK industry has had a shocker when it came to dealing with FOBTs. It has shown a lack of creativity, innovation and empathy and now thousands of employees up and down the country face an uncertain future. Everyone loses in this game.