UK Reduces Maximum FOBT Bets to Just £2

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Monday, May 21st, 2018 | Written by Adam Brown

The government of the United Kingdom has just decided to cut the maximum stake for fixed odds betting terminals (FOBTs) from their current level of £100 down to just £2. The change was announced Thursday, May 17 by the Department for Digital, Culture, Media and Sport, but must still be ratified by Parliament before becoming effective, which is expected to happen sometime next year.

What Is an FOBT?

Fixed odds betting terminals are electronic devices that simulate casino gambling, with the games most popularly featured on FOBTs including slots, roulette and bingo. These machines are commonly located at high street betting shops, like those operated by William Hill and Ladbrokes, which are each allowed to contain up to four of these terminals each.

FOBTs have become a staple of the British gambling scene since they were first introduced in 2001. These days, there are more than 33,000 of them in operation in Britain, generating £1.8 billion in annual revenue for gambling operators and £400 million in taxes for the government, according to figures from the U.K. Gambling Commission (UKGC).

Why Is the Maximum Stake Being Lowered?

FOBTs are very popular within the United Kingdom – perhaps too popular in the eyes of some. Because there’s no physical apparatus that must be adjusted between game rounds and little real opportunity for social interaction among the players, punters can keep betting uninterruptedly for extended periods of time. Tales abound of workers losing their week’s wages within an hour, and there are documented cases of people dropping tens of thousands of pounds into these machines during a single session.

The quick-fire nature of this gaming combined with the fact that up to £100 can be wagered every 20 seconds has drawn the attention of anti-gambling activists. Indeed, a spokesman for the Campaign for Fairer Gambling has called them “the crack cocaine of gambling.”

The government seemingly agrees with this negative assessment of FOBT wagering and the harm they can do, and as the Minister for Sport and Civil Society Tracey Crouch recently opined:

“Problem gambling can devastate individuals’ lives, families and communities.. By reducing FOBT stakes to £2 we can help stop extreme losses by those who can least afford it.. While we want a healthy gambling industry that contributes to the economy, we also need one that does all it can to protect players.”

Background Information

The U.K. government solicited feedback from interested parties during a consultation on gaming machines held from Oct.31, 2017 to Jan. 23, 2018. During this time, there were 7,361 survey responses and 243 pieces of additional information submitted, with the new £2 betting maximum for FOBTs being one of the measures recommended as a result of the consultation.

Bookmakers had long expected a more restrictive wagering limit to be put in place, but many were optimistic that a higher figure, like £50 per wager, would be chosen. These hopes were all but dashed when the Gambling Commission issued its own report in March urging the adoption of a maximum bet of £2 for slot FOBTs and no more than £30 for non-slot games, such as roulette.

In fact, the £2 across-the-board limit on bet sizes was the lowest number being seriously considered, and the fact that it was the value eventually chosen represents a huge triumph for opponents of gambling in the country.

Potential Consequences on the Bookmaking Industry

After the announcement of the government’s decision, major industry players expressed their dissatisfaction as to the seemingly draconian measure. After all, FOBTs are responsible for a significant share of betting shop profits, and so the organizations that offer them expect are now expecting to take a big hit to their bottom lines.

The Association of British Bookmakers forecast 4,000 shops closing down and 21,000 employees losing their jobs as a result of the £2 limit. William Hill, which owns more than a quarter of all U.K. betting shops, believes that it may have to shutter as many as 900 of them while suffering £100 million in reduced profitability.

One of the few betting concerns that have expressed contentment with the new wagering limits was Paddy Power Betfair, however, with former CEO Breon Corcoran having previously called for a maximum bet of £10 or less on FOBTs, and his successor Peter Jackson reiterating this position. This view was allegedly driven by a desire to enhance the tarnished reputation of the bookmaking industry. More likely, though, the fact that Paddy Power Befair operates only a few hundred betting shops in the UK, as opposed to the thousands run by its rivals, may have more to do with the opinions of the firm’s execs.

Online Impact

Revenues at brick-and-mortar betting establishments are expected to decline along with tax receipts as a result of the new rules. Furthermore, many bettors seeking bigger rewards will most likely head online to play slots where they can place higher wagers at internet casino sites.

Nonetheless, this development may not be an altogether positive event for online gaming operators. There have been calls in some quarters for the current 15 percent tax on internet wagering to be increased to compensate for the decline in land-based gambling taxes. No detailed proposals have yet been offered on what the new online tax rate should be.