Changes to fixed odds betting machines: the impact on UK gambling operators

Jan. 31, 2019 – It was recently announced that there are to be dramatic changes to fixed odds betting terminals (FOBTs) in the UK.  The maximum bet of such machines will drop from £100 to £2, in a move that’s expected to impact high-street bookies.  The changes will be enforced from April 2019 and the news has many bookmakers fearing the future of their business – particularly when it comes to the revenue they’ll bring in, and the impact that will have on staffing resources.

The changes were originally expected to happen in October 2019, but the changes have now been brought forward to April after huge pressure from the Labor opposition – notably deputy leader Tom Watson.  Lawmakers argued that the move will help reduce problem gambling, but it’s attracted a fair degree of controversy too.

The pros of the move: fighting against gambling addiction

The main driver behind the crackdown on FOBTs is the fact they can appeal to problem and underage gamblers.  Anyone can just walk into a bookies and start playing on a FOBT – it’s up to the manager or supervisor to decide whether or not they’re a problem gambler or whether they’re old enough.  Even if they have the time to identify this, it’s likely the person in question would just gamble elsewhere – so prevalent bookies are on the UK high street.

The machines have no way of setting players a budget – unlike online, where players can fix budgets plus self-imposed ‘rest periods’ to prevent them gaining access when they feel they might be going too far.  What’s more, online gambling operators can more effectively impose age restrictions, as users have to prove they are over 18 to access any of their games.

In land-based bookies, it’s a different story.  FOBTs often attract problem gamblers and underage players.  Almost 14% of people who use FOBTs are regular gamblers – a higher percentage than any other popular form of gambling.  Recent studies and surveys have shown that individual gamblers lose more than £1,000 on fixed-rate betting machines – a huge amount for any one person to lose in a single sitting.

Former Sports Minister Tracy Crouch recently resigned from her role over the new policy.  She claimed: “people are losing their lives over these machines.”

While many thought the move was extreme, others felt it was justified.

The cons of the move: UK job losses

FOBTs are bookmakers’ biggest source of income, with each machine taking in £53,000 per year.  High-street bookmakers derive more than half of their revenue from betting machines, and with the maximum dropping to just £2, it’s understandable that some are concerned about their future.  Ministers have ignored pleas from bookmakers, who aren’t just worried about cutting their profits in half, but could also lead to significant job losses across the industry.

FOBTs have become increasingly more important to land-based betting shops due to the competition they’re facing online.  In the UK, online gambling accounts for around one-third of total revenue, according to the Gambling Commission – making it the single largest gambling sector.

With more online gambling sites hitting the market all the time, land-based casinos and bookies are struggling to compete with the engaging games, multiple options and overall allure of the online gambling community.  With most homes having unlimited WI-Fi access, it’s never been easier to enjoy some light gambling online – so players are understandably keen to bring the casino experience to their living room, play their favorite games remotely using their mobile device.

Online gambling sites tend to offer players more choice and freedom.  There’s no queue at the live roulette table and players can come and go as they please.  With fewer restrictions in terms of fixed betting amounts, it’s no surprise that more gamers are choosing to play online rather than at their local bookies.

As well as featuring the same games as FOBT’s – usually roulette, blackjack and poker – online operators have multiple slot games themed around the latest music, movies and more. Then there’s ultimate immersive experience of Live Casino, which connects players with real-life dealers and other competitors.  Bingo is also a very popular option, especially when it comes to players within the UK.  Over the years, online bingo communities have developed and grown, to provide an environment where not only you can play bingo online, but can also interact with other players and make friends.

This backdrop has made FOBTs a key fixture in high street bookies, providing players with an electronic equivalent of games they can play at a land-based casino or online.  By reducing the maximum bet and making FOBTs less appealing, bookies are worried that their revenue will take a plunge as a result – and mean they’re forced to lay off a significant proportion of staff in line with fewer customers.

Summary

While it remains to be seen quite how the FOBT ruling will impact high-street bookies, not many people can argue that the move is there to protect users and promotes sensible, responsible gambling.

One of the way the UK gambling industry has been so successful is because it enables operators to flourish with strict regulations in place.  Strict rules underpin the sector – and these rules are regularly tightened as the Gambling Commission reviews the reality of gambling in the UK.

Just look at gambling advertising, which has suddenly been banned during live sports broadcasts.  The industry is subject to this kind of change at any given moment – and the operators which are most agile are the ones which will succeed.  As we have seen from the demise of other high street brands, this often favors online operators, who may well be ready to extend their dominance of gambling with the FOBT ruling.