Why the £2 Betting Cap Killed the UK FOBT Gambling Scene

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The UK features one of the biggest gambling markets in the world. Both their online and land-based gaming markets bring in billions of dollars per year.

Fixed odds betting terminals (FOBTs) are a big part of the UK’s land-based gambling scene. Up until 2019, they were bringing in £1.8 billionannually for the country’s betting shops.

Now, however, the UK features a £2 betting limit on FOBTs. This wagering cap has effectively killed off many betting shops and threatens to derail the entire industry.

You can keep reading to find out why the wagering limit is so devastating along with if sports betting shops will ever recover.

What Is the £2 Betting Cap?

Betting shops are known first and foremost for offering sports gambling. But they also feature FOBTs to bring in additional revenue.

After all, a smalltime bookmaker doesn’t stand to earn much profit from sports betting juice (around 5% of each wager). They can, however, make ends meet by drawing customers with gambling machines too.

Fixed odds terminals offer everything from slots to electronic roulette. They used to allow wagers ranging from £0.05 to £100. The £0.05 wagers are still in play. But Parliament instated the aforementioned £2 wagering limit on FOBTs in 2019.

Gamblers can now only wager up to two pounds per round/sports bet on these machines. This limit applies to all FOBT games, including horse betting, sports gambling, slots, roulette, and anything else.

Why Have Politicians Limited Bets on FOBTs?

A movement to limit stakes on fixed odds machines began growing a couple of years ago. The Department for Digital, Culture, Media, and Sport (DCMS) produced a study noting that high-stakes FOBTs lead to gambling addiction.

Even before this, politicians have labeled FOBTs the “crack cocaine” of gambling. Other lawmakers call these machines a “social blight.”

Matt Hancock, the secretary of state for the DCMS, used the latter term when discussing the problems that he sees with FOBTs.

“These machines are a social blight and prey on some of the most vulnerable in society,” he said. “And we are determined to put a stop to it and build a fairer society for all.”

Eventually, an anti-FOBT sentiment began spreading throughout Parliament. More studies and negative stories regarding these machines started circulating throughout the news. Lawmakers began discussing a solution that would help problem gamblers stop losing so much on these games. A £2 betting cap became the preferred option.

Bookmakers argued that such a wagering limit would crush the industry and result in many lost jobs. After all, most betting shops draw around half of their revenue from fixed odds terminals. These arguments fell on deaf ears, though. The government instituted a nationwide £2 wagering limit on FOBTs.

Why the FOBT Betting Limit Is Destroying UK Gambling

As the industry predicted, the betting limit is already causing great harm to the UK betting market. Here are the primary reasons why it’s having such a drastic effect.

Maximum Wins Are Capped

Many people who play gambling machines dream of winning big prizes. They might envision themselves hitting a big slots jackpot or winning several big roulette wagers in a row. Such wins are more possible through higher stakes. In the case of slots, bigger bets help increase progressive jackpots quicker.

High-stakes wagers on roulette, blackjack, or other forms of electronic gambling can also result in large wins. But a £2 cap drastically lowers the opportunities to score serious money.

A slots jackpot can still grow with smaller wagers involved. However, it takes much longer to reach six or seven figures with £2 max wagers. Real money roulette players, who commonly use FOBTs, have very little chance to win big. They’d need to win several single-number (35:1 odds) wagers in a row to net major profits.

High Rollers Now Ignore FOBTs

FOBT high rollers include those who wager £50 or more per round. These gamblers are willing to assume more risk for a chance at larger payouts.

They don’t get as many thrills by betting a pound or two. They’re now limited to such bets, though, due to the new laws in place. The same bettors seek out high-stakes opportunities elsewhere. Both UK land-based and online casinos offer these opportunities.

William Hill Closed a Number of Their Betting Shops

Bookmaking giant William Hill is one of the largest employers in Britain. However, they immediately announced plans to close up to 700 betting shops following the wagering limit.

They did have 2,300 shops and 12,500 employees throughout the UK before the limit went into place. Based on their new direction, they’ll cut down to 1,600 betting shops and 8,000 employees.

William Hill has expanded into America since the fall of PASPA in May 2018. Meanwhile, they’re reducing their UK-based locations.

More Betting Shops Are Guaranteed to Close

William Hill isn’t the only one feeling the sting of the betting cap. As noted by the Association of British Bookmakers, more shops from other companies have or will close in the immediate future.

They estimate that over 4,000 shops will shut down as a direct result from the wagering cap. This number of closures would equate to around 21,000 in lost jobs. The Association of British Bookmakers also notes that these shop closures will just shift where problem gamblers are risking their money.

“The independent expert advice warned that this would simply shift people,” the association noted, “the majority of whom gamble responsibly, to alternative forms of gambling where there is less chance of human interaction and its impact on problem gambling levels is far from certain.”

Will UK Betting Shops Ever Bounce Back From the Wagering Cap?

The UK sports gambling industry has definitely taken a serious hit from the betting limit. Again, many shops rely on FOBTs to provide half of their revenue (or more).

However, not all is lost for bookmakers in Britain, Northern Ireland, Scotland, and Wales. Some will still get by with the FOBT action that they continue to receive.

After all, gamblers will still continue using FOBTs even with lower limits involved. A larger portion of bettors don’t even risk over £2 per wager anyways. Those who do will be comfortable betting just £2. They may even find that getting more play out of their bankrolls is preferable.

Paddy Power Betfair noted a potential upside of the limit. They stated that FOBTs had delivered “reputational damage” to the sports gambling industry and the betting cap will help repair the image.

They’re right when considering all of the social-blight and crack-cocaine references that have been hurled at FOBTs.  Perhaps now, politicians will shift focus away from fixed odds terminals. In turn, FOBTs may draw a new crowd that’s not influenced by negativity towards these games.

Certain bookmakers will even put renewed focus back on sports and race betting. Jenningsbet noted that the industry needs to get back to its roots anyways. They believe that bookmakers could benefit from having a “more collaborative and healthy relationship with horse and greyhound racing.” Both sports have suffered within recent years as bookmakers and bettors turn their attention elsewhere.

The sports gambling industry will probably still suffer due to the wagering limit. But as you can see, they’ll continue finding ways to pull in revenue and make profits.

Conclusion

The UK government takes problem gambling very seriously. They’ve shown this by limiting wagers on fixed odds machines to just £2. Whether this measure ultimately works remains to be seen. Judging by declining betting shop revenue, though, it has had a definite effect.

William Hill announced plans to close around 700 shops immediately after the news. An estimated 4,000 shops are expected to shut down altogether.

These closures and the lower betting limits will no doubt anger some gamblers. However, they could certainly be a good thing for problem gamblers who can’t control their wagering habits.

Michael Stevens

Michael Stevens has been researching and writing topics involving the gambling industry for well over a decade now and is considered an expert on all things casino and sports betting. Michael has been writing for GamblingSites.org since early 2016. ...

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Michael Stevens

Michael Stevens has been researching and writing topics involving the gambling industry fo ...

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