UK Government Delays FOBT Maximum Stake Reduction Until 2020

Home » Poker News » UK Government Delays FOBT Maximum Stake Reduction Until 2020

Tuesday, June 19th, 2018 | Written by Charles Washington

In May, the UK government responded to pressure to reign in the country’s fixed odd betting terminals (FOBTs) industry by reducing the maximum allowable stake on these machines from £100 per spin to just £2. The decision was made in order to address the highly addictive nature of these machines and growing concern over rising problem gambling numbers in the UK which currently stands at around 2 million people, of which around one-quarter are estimated to suffer from serious gambling problems.

The government was then expected to introduce the new measure this year, but in a surprise move has now delayed its implementation until the year 2020, apparently to allow sufficient time for suitable legislation to be drafted. More crucially, however, the government appears to have caved in to pressure from gambling companies to permit them a transition period to adjust to the new reality, and as the Association of British Bookmakers explains:

“The £2 maximum stake will cause thousands of job losses and will require significant readjustment in the industry in terms of shop numbers. Implementation time would be key to enabling operators to utilize redeployment and voluntary redundancy and to renegotiate leases – potentially saving some shops and jobs. In addition software changes to the architecture of hundreds of games will need to be made.”

Monetary Concerns

FOBTs have become a lucrative part of the gambling industry, and each year these machines situated at bookmakers across the country generate £1.8 billion in revenue for operators. They are also a significant contributor to the UK Treasury, and between now and 2023 the segment was expected to generate £74 million for government coffers.

Needless to say, UK Chancellor Phillip Hammond and the gambling industry as a whole have expressed concern over the massive reduction in FOBT stakes, as well as the potential hit to profits levels, and a likely shedding of up to 20,000 jobs following a swift implementation of the measure. As a result, the decision has now been made to give the industry an extended change over period in which to minimize its potential negative impact, which should also provide bookmakers with £4 billion cushion before the maximum stake is implemented in 2020.

Labour Party Criticizes Decision

The Conservative government’s decision to delay its clampdown is likely to cause a rift with the Department for Digital, Culture, Media and Sport (DCMS), which had been expecting to complete implementation of the new wagering regime within a nine-month period.

Meanwhile, the opposition Labour Party had some rather harsh words reserved for the government, calling it “pathetic”, “fundamentally weak” and pandering to the whims of the gambling industry. For instance, FOBT manufacturers originally stated that they would need up to two months to customize their FOBT software, but have since increased that estimate to 24 months. As Labor Party leader Tom Watson explained in a statement:

“Capitulating to a two-year delay is a pathetic move from a fundamentally weak government. Those who praised the government when the announcement was made will feel badly let down. They are already rolling back on their promises and allowing these machines to ruin more lives.”

Ruining More Lives

On that last point, anti-gambling groups see the delay as an unacceptable move by the government that will only serve to expose more people to the harm created by FOBTs, and therefore contribute to an overall increase in gambling addiction in the UK. Moreover, allegations have also been made that within the next two years the government may cave in to pressure exerted by the powerful gambling lobby and backtrack on its decision all together.

Internet Gambling Tax Increase

In the meantime, gambling operators will not have it all their own way, and in order to offset the loss of earnings that should have resulted from the FOBT stake reduction, the government has announced it will be raising the amount of tax paid by online gambling companies on their earnings.

According to the government, the higher Remote Gaming Duty planned for the Autumn 2019 budget is necessary to protect public finances, and secure funding for vital public services. That said, the increase in gambling tax may simply be passed onto the customers of gambling companies in the form of higher costs, with poker players likely to be particularly impacted by the development.

In France, for instance, gamblers have had to endure higher levels of rake for many years now, and even PokerStars France had been charging a 6.5% charge on its cash game pots, although that figure has fallen slightly to 5.75% following the pooling of French and Spanish poker players in January.