Published On: Tue, Apr 18th, 2017

Government’s Crackdown on High Stakes Machines to Hit Bookmakers Hard

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The UK government has ordered a new code of conduct in order to address concerns over fixed-odds betting terminals. Downing Street announced a crackdown on high-stakes gambling machines and imposed fresh penalties on bookmakers if they don’t enforce new standards and limits on betting losses and playing times.

 

Fixed-odds betting terminals, also known as the “crack cocaine of gambling”, has raised serious economic concerns before the Government. FOBTs account for about £1.3bn to £1.5bn as annual player losses, and high stakes gambling machines account for half of gross profits of bookmakers. But the new code aims to toughen betting controls and allow punters to bet up to £300 a minute.

 

The high stakes machines take addicting casino games, speed them up and prod punters to place large bids in quick succession. FOBTs, in the recent times, have exposed even leisure gamblers to potential risks of loss. Therefore, critics called for stricter government action to curb economic losses resulting from such activities.

 

How will the crackdown affect bookmakers?

 

FOBTs3Ladbrokes Coral, a British-based gambling and betting company, expects a whopping loss of £450m in sales revenue if the Government introduces the new set of codes for high stakes gambling machines. Considering the suffering caused to gambling addicts by high stakes machines, the government is making an aggressive cut in maximum stake on fixed-odds betting terminals, bringing it from £100 to £2. According to Barclay’s analysts, the bookmakers would be affected the most compared to their rivals in the gambling industry.

 

The government’s new limit is likely to reduce Ladbrokes sales revenue by £449 next year. Paddy Power Betfair, another larger rival of Ladbrokes, is expected to suffer less but will still experience a revenue slump by £55 million. William Hill is also counted amongst the few bookmakers that will face a financial blow as a result of the government’s crackdown. However, maximum stakes of £10, £25 and £50 would affect bookmakers a little less, but a figure below £50 would trigger cost cutting across the industry.

 

The Association of British Bookmakers said that about 2500 and 3300 shops are expected to close by 2020 if the £10 and £20 stake limit is imposed respectively. However, the government is maintaining caution and diligence in dealing with the issue. The “limited evidence”, as said by the government, establishes that gambling as a problem has increased due to FOBTs. Moreover, the government is also taking employment and tax revenue into consideration while imposing such limits on bookmakers.

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