It’s now more than a year since the UK government – assisted by the UK Gambling Commission – introduced the maximum stake cut for FOBT machines on the British high street.
Before, punters could visit their local betting shop and cram one hundred pounds into a Fixed Odds Betting Terminal per session – leading to some to label them the ‘crack cocaine of betting’.
In April 2019, the government approved a cut in the FOBT maximum stake to £2 – a move derided by the bookmakers but applauded by campaigners seeking societal reform.
Has the move been a success? The suggestion is that there are fewer related issues caused by the addiction to FOBTs, while the police have reported a significant cut in the number of callouts they have had to answer – more on that later.
Of course, there are two sides to every coin, and the bookmakers have warned of apocalyptic conditions for their high street shops, with closures and redundancies an already confirmed side effect of lost revenue. William Hill apparently lost £63.5 million in the first half of 2019 as a direct consequence of the maximum stake cut – a 25% decrease in income from the machines.
So with the passage of time, can we say that cutting the FOBT maximum stake has been the right thing to do?
A Better Way of Life
The thing with gambling addiction is that it is cyclical.
An individual afflicted with any form of addiction goes to bed at night thinking about their next ‘hit’, and they wake up the next day and from the get-go they think about actioning their addictive urges – that takes priority.
What the gambling industry has done with its FOBT stake cut – and its ban on credit card betting – is minimise the damage caused by addiction. People can no longer gamble money they don’t have, and the cap on their spending is crucial in protecting their economic, physical and mental wellbeing.
There are unfortunate side-effects of addiction, and crime is the most obvious and devastating. Happily, the police have reported a huge 40% reduction in callouts to betting shops in 2019 – the FOBT rule changes are surely no coincidence in that.
The actual numbers are stark. Police were called to betting shops on 1,803 separate occasions in 2019, typically to answer complaints of members of the public abusing staff or trying to smash FOBTs to smithereens after a particularly hurtful losing streak.
But that was down from 2,907 in 2018, and if we look through the archives a bit further we see there was a staggering 4,060 reported incidents in 2016.
That is clearly a monumental step forward for the industry in tackling problem gambling, and aside from the lost profits caused by the FOBT stake cut, we should all be thankful that the community as a whole is benefiting from a change in the humble high street betting shop.
There’s an old saying in life that as one door closes, another opens.
The bookies had a major revenue stream ripped away from them in April 2019, and at that point their chiefs had a simple decision to make: how are you going to be smarter and make more money from our core products?
For every William Hill bemoaning conditions in the UK betting industry, there’s a Betfred – they reported a 15% in annual turnover in 2018 from their retail and online operation. One of the main factors behind Fred’s rise was simply that the total amount bet with them rose to £13.5 billion – get the punters in, and the revenue will surely follow.
Bet365 saw a rise in profits of 10% in 2019 – they are completely web-based and so the FOBT changes didn’t affect them, and it does seem as though more firms may eschew the high street altogether in a bid to grow their customer base online.
Here’s an interesting stat: online slot games are now on a par with FOBTs in terms of revenue, and so clearly there is a market there for comparable online gaming to what is available on the betting terminals.
The online bingo sector saw a scarcely believable rise even as the gross gambling yield of the UK market shrunk – between October 2018 and September 2019, the last full trading period reported, online bingo saw a 12.5% increase in yield, up to £198 million a year.
Meanwhile for the same period, remote sports betting – i.e. online and through apps, saw a 4.3% increase in gross gambling revenue.
The bottom line here is that bookmakers can still thrive, even without the ‘easy money’ FOBT culture. Get smarter, improve your online offering and the results will speak for themselves….