Report questions impact of cutting FOBT stake

11 January 2018

Slashing the maximum stake on fixed-odds betting terminals (FOBTs) in the UK may not negatively impact the industry as much as the government has forecast, according to a new report.

In October, the government announced that the Department for Culture, Media and Sport (DCMS) is to head up an in-depth review of the UK gambling sector and consider a series of proposals.

FOBTs form a major part of this effort, with the DCMS to look at suggestions to cut the current top stake from £100 to either £50 or £2.

Commissioned by bacta, the study by the Centre for Economics and Business Research (CEBR) found that industry losses could be up to 47% lower than suggested by the government’s initial impact assessment.

The CEBR said that cutting the maximum stake on FOBTs from £100 to £2 would lead to a loss of £335m (€378.4m/$452m) in gross gambling yield to high street betting shops, compared to the government’s prediction of £639m.

The report added that these figures could be offset when compared to the £210m the CEBR estimated as the fiscal cost of problem gambling associated with FOBTs, once its impact on welfare services, work and housing issues, and criminality have also been taken into account.

In addition, should the top stake be cut to £2, the CEBR said this is likely to lead to a net increase of an estimated £45m to gross value added.

“We demonstrate that, under different assumptions that better reflect the profile, circumstances and likely behaviours of B2 players, the policy would be not nearly as detrimental to the licensed betting operators as has been portrayed,” CEBR director and chief economist, Oliver Hogan, said.

“In fact, there could even be a net boost to the economy and to employment if there is attrition from gambling and if the fall in demand for B2 leads to higher demand for more labour-intensive forms of gambling.

“Once the potential wider benefits to society that could be realised if a B2 stake reduction leads to a declining prevalence or severity of problem gambling, the case for the policy is even more favourable.”

John White, chief executive of bacta, added: “While there will be some cost to bookmakers from lower FOBT stakes, it is a necessary one to protect consumers from the everyday risk of gambling harm on the high street.

“The £100 stake on FOBTs is a dangerous anomaly in gambling regulation that Government has rightly chosen to address.

“We urge reduction to a £2 stake; that brings these machines in to line with the rest of the market, and puts the needs of player protection first.”

Related article: UK government considers £2, £50 max bet options for FOBTs