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FOBTs dominate headlines but changes to industry will be wide-ranging

Published:

3 Apr 2018

FOBTs once again made the headlines this month but the UK sector and its operators should brace themselves for wide-ranging and significant changes in the coming months, writes Dominic Gates.

The past month’s gambling industry headlines have once again been dominated by fixed odds betting terminals (FOBTs) and the announcement of the Gambling Commission’s recommendation that FOBT stakes should be £30 or less.

Reading the news it would have been easy to conclude that the Commission had recommended a maximum bet amount of £30. Except it hadn’t.

Room for manoeuvre

The Commission’s report, published as part of its Triennial Review looking at the gambling sector as a whole (and not just FOBTs), recommended that FOBT stakes should be “£30 or less”.

So in theory, the maximum FOBT stake could be reduced to anything from the £2 anti-FOBT campaigners have long called for, to the £30 the industry is crossing its fingers for. It is now up to Matt Hancock, the Secretary of State in charge of the Department for Culture, Media and Sport, to decide.

It’s revealing, but not surprising, that the Gambling Commission has given itself so much room for manoeuvre. The more cynical observers have commented that it knows which side its bread is buttered on and can not afford to upset an industry on which it relies for funding.

Undeniably there is some truth to that argument, and the fact that it left the potential change to the maximum stake so open in effect means it has passed on responsibility for any meaningful change to the government.

However unlikely, should the latter decide on £2 as the maximum stake, the Commission will be able to turn round to UK bookmakers and say it gave the government ample scope for variation. ‘Too much scope, clearly!’ is what the bookies will reply should their nightmare scenario happen.

Industry watchers expect the government to split down the middle and go for between £20 and £30 as a maximum stake. Either way, by providing such a wide range anti-FOBT campaigners believe both the Commission and politicians are caving in to pressure from the industry and failing to protect the most vulnerable punters in society.

The other key consideration is the tax revenue that FOBTs generate, in 2016 this totalled £760m out of £1.8bn in FOBT-generated revenues, and will likely be a similar amount in 2017.

Whatever happens that figure will drop for the Treasury whenever DCMS makes its maximum stake recommendation, the key for bookmakers will be finding ways to make up for the drop in FOBT revenues.

For this observer, the way to do address the issue would be to go back to developing core betting products that are innovative and attract punters back into the shops. Unfortunately they have so far shown no inkling or determined drive to do that as they rely on machines that now supply them with close to 50% of its £4bn overall revenues.

One consequence of this FOBT ‘clampdown’ will be the inevitable closure of many betting shops across the UK – no bad thing, many will say; although those losing their jobs will have to find other options.

Wide-ranging changes

As mentioned at the start of the article, the Commission’s report was published as part of its Triennial Review looking at the gambling sector as a whole and for the online gambling sector there are a whole raft of other developments which could bring yet more changes and potential costs to their operations.

The measures proposed by the Commission are wide-ranging and therefore could have a significant impact on the industry and players.

In an attempt to make online gambling safer, new plans have been introduced to protect the most vulnerable in society and improve social responsibility in connection with remote gambling.

The Commission has confirmed that it will undertake consultations on the following potential changes:

  • further protection for children by banning operators from providing free-to-play demo games until a consumer’s age has been determined,
  • improving the speed and effectiveness of age verification processes,
  • ensuring operators set limits on consumers’ spending until affordability checks have been conducted,
  • tackling unacceptable marketing and advertising and unfair terms, and improving complaints and disputes procedures; and
  • strengthening requirements to interact with consumers who may be experiencing, or are at risk of developing, problems with their gambling.

These potential changes have been in the offing for some time and can be seen as a logical extension of existing enquiries by the Competition and Markets Authority and the Advertising Standards Authority.

They will also give the Commission more powers should it decide to take legal actions against operators who fail to adhere to the relevant standards.

When it comes to corporate and social responsibility, the Commission will be looking into many areas.

These include the effectiveness of current tools available to consumers to manage their gambling, whether some product characteristics present more of a risk than others, the protection of customer funds with a focus on dormant accounts, whether gambling on thanks to credit cards should continue to be allowed and potential changes to make it easier for consumers to withdraw funds.

All these areas have been in discussion for at least the past two years, the aim being to protect the vulnerable and players most at risk of developing gambling addictions. However of all those topics it will be whether credit cards are allowed to be used that will worry many operators the most.

For all that though it is easy to see that once all the FOBT-related dust has settled, the use of credit cards for online gambling and the proliferation of gambling advertising will be the next key battlegrounds for the industry.

How times have changed since the Gambling Act 2005 came into force more than 10 years ago.