X
    Categories Industry Insight

Why the FOBT British Gambling Restrictions are a Bad Idea

There has been a lot of news in the gambling world over the last couple of weeks – a lot more than a normal week, that’s for sure. With the great run by a longshot in the NHL playoffs and the favorite running away with the Kentucky Derby, as well as the huge news coming from the US Supreme Court repealing the PASPA legislation, there was a lot to talk about. What you may have missed during that time was a seemingly smaller news story out of England about the future of the Fixed Odds Betting Terminals (FOBTs). Here is a link to that news so you can catch up.

I have had a few days to let this news digest, but I still have the same opinion as when I first heard the news: this is a terrible, short-sighted idea to try to control problem gambling. It seems that the UK government feels this reduction of the maximum bet on these machines from 100 GBP to 2 GBP is enough to shock the problem gambling out of the industry. I am here to tell you that this is way off base…and I felt it was important to let you know why.

Why This Is a Terrible Idea

Rather than go on a long-winded rant about my feelings on this topic (which I am known to do), I am going to try to stick to the main points and make my case in a more civilized manner. To clarify, the UK government, based on a report by the UK Gambling Commission (which it oversees), chose to reduce the maximum bet on any FOBT machine by 98%. Drastic? Yes. Effective? I doubt it. Here’s my take on it all.

It’s Bad for the Land-Based Industry

When the Gambling Commission released its findings in March, it was met with heavy resistance from prominent members of the land-based betting community in the UK. The majority of FOBTs can be found in these betting shops, and the estimated volume of revenues coming from FOBTs is higher than that from sports betting. Companies like BetFred and William Hill were quick to chime in, claiming this would end up costing thousands of British jobs and could weaken the companies to the point where being acquired by foreign interests could happen.

Now, let’s be clear, this is also a bit of posturing on the side of the sportsbooks, who are of course trying to protect their own interests. However, there will indeed be a sharp decline in the revenues from these machines, which will hit the bottom line pretty negatively.

It Seems Like a Knee-Jerk Reaction – Why 98%?

I’d like to believe that the government did its homework and that the Gambling Commission researched how much of the revenue was being driven by max-bet players. If they did, then maybe this will explain the massive reduction in maximum bet size. My guess? They wanted to announce something that the problem-gambling community would applaud. Personally, I would have considered some sort of trial run – announce the plans to make drastic changes, but in multiple stages. This way, the industry could track the effects of the changes, while operators would have some time to introduce new products to help control the bleeding of revenues. I just don’t understand why the government jumped straight to the “nuclear option.”

This Will Drive Players Back Underground

I have seen this story play itself out before in other markets, and it doesn’t have a pleasant ending. These days, internet gambling is easier to access than ever before. You don’t need a PC anymore, and you don’t even need a credit card, as most sites allow prepaid payment options. So, if you take the high-stakes betting out of the shop window, players can easily replicate the behavior online. The difference? Now it’s far more difficult to track, but more importantly, it is no longer in the public eye. This does nothing to control problem gambling – just the appearance of it on the High Street.

Why Only FOBT and Not Other Games?

So, the Gambling Commission produces a full report on the state of gambling in the UK, and this is the only measure the government chooses to implement? Seems a bit odd to me. There are plenty of other games that allow high stakes, whether it is in a casino or sportsbook. Why aren’t these games also now metered? Also, what is stopping someone from spending hundreds of pounds at a time on lottery tickets or scratch-offs? I think it is a bit short-sighted of the government to have made this decision without considering more wide-scale changes.

Find Better Ways to Control Problem Gambling with Commission

Look, the government established the Gambling Commission to, in part, help keep an eye on the industry. The Commission has licensed many online companies that have all the data needed to identify problem gamblers. Also, all the land-based shops have online companion sites themselves. The regulator should be working with all its licensees to better track the play of UK residents, especially the crossover between online and offline play, so they can work to identify which players shouldn’t be playing FOBTs at such a high volume.

This Sets a Bad Precedent

This also seems to set a very bad precedent when it comes to what the government can and should control. Set aside the obvious hypocrisy in setting limits for this game but not others – this gives the blueprint to other governments to implement the same changes. Look, I am not saying that everyone should have carte blanche for how much they should bet – problem gambling can ruin lives. However, just reducing the amount someone can bet isn’t going to fix them…in fact, it could make them play longer to get their fix or turn to some less-regulated means. The tax revenue that comes from these games is supposed to be put back into programs that address problem gambling, so the reduction of these maximum bets feels a little bit like cutting off your nose to spite your face.

Conclusion

I don’t profess to have the right answer to this problem in the UK, but I am sure of one thing – this one act of drastically altering the land-based betting landscape will do more harm than good. The one thing I just can’t wrap my head around is how a government that has been so far ahead of the curve when it comes to gambling regulations could have gotten this so wrong on so many levels. I expect this won’t be the last we hear about this, so who knows…maybe I will get to write a more positive piece on this news in the future!

James Sullivan :