Horse racing would benefit from reducing the maximum stake on FOBTs
Last week, Paul Bittar, Chief Executive of the British Horse Racing Association (BHA), told the Racing Post that a cut in the size of Britain’s betting shop estate would be highly damaging for racing. It was noted however that Bittar “distanced” himself from the latest tax and regulation issues facing Fixed Odds Betting Terminals (FOBTs).
The BHA’s latest lukewarm support for the bookmakers in their battle to protect FOBTs is hardly surprising, particularly when the CEO of Britain’s largest operator is making absurd predictions about
horses being killedif stakes are reduced. Using horse racing as a blackmail tool to protect the highly contentious and increasingly doomed FOBT won’t be going down too well with the racing sector.
The BHA should have a close look at the latest evidence showing how bookmakers have, once again, “overstated” the impact of a cut in the stake using “seriously flawed” representations of data.
NERA Economic Consulting analysed the Association of British Bookmakers (ABB) economic modellingof a stake reduction on FOBTs, which was submitted to the Department of Culture, Media and Sport last year and has shown clearly that the ABB’s claims are wrong. NERA has downgraded the ABB’s latest 7,800 shop closures to a range from 700 to 1,200. A £2 cap on FOBTs is not the end of betting shops as we know it, far from it and nor does the
Campaignwant it to be.
Unlike the bookmakers’ assumption that 68% of revenue will suddenly evaporate from betting shops, NERA takes a realistic, logical approach and shows that increasing slots revenue and transfer of casino game spend to over the counter (OTC) betting opportunities could actually benefit the horse racing sector. In fact, NERA’s worst case scenario of a 40% loss of FOBT revenue would have the greatest benefit on OTC betting with a rise from £1,460 million to £1,628 million. The difference is that machines would no longer be the primary gambling activity in betting shops. That would please Newham Council who have just
rejected one of Ralph Topping’s shopsin the already clustered area of Green Street.
No wonder the BHA keeps its distance from the bookmakers’ claims: one week
Ralph Topping says clustering can “cause harm”and the next he’s trying to open shops in one of the most clustered areas in the UK.
The fear that there will be mass closures of betting shops is a powerful one. The
Campaign for Fairer Gamblinghas long argued that fear is over played. NERA has confirmed that now - politicians and the horse racing sector should take note of what they say.
Seven hundred to 1,200 shop closures is still no small number, but it doesn’t reflect the full picture. Those shops impacted the greatest by a reduction in FOBT stakes would likely be those opened since the removal of use class and demand test in 2007. The ensuing high street free for all has led to bookmakers chasing FOBT revenue, with pack mentality, across our town centres. If Cameron, Miliband and Clegg think bringing back use class, or a watered down version of it, will deal with the problem, think again. The one simple action that doesn’t require primary legislation and would deal with clustering is a stake reduction to £2. NERA’s predicted range of shop closures will encompass those shops in areas of clustering and those shops whose FOBT revenue is above 51% of gross profit, which is the national average.
But where does that leave horse racing if, as NERA says, betting shop numbers fall back below pre- 2007 levels? During the 1990’s, before FOBTs, betting stakes were falling at a rate of 0.8% per year and this was during a period of recession and the introduction of the National Lottery. Betting shop numbers also fell, but the average real revenue per betting shop actually rose. This shows clearly a dispersal of business from those shops closed across those remaining. In contrast NERA says: “since the introduction of FOBTs real betting stakes have fallen at a much faster rate” – 3.7% a year based on Ladbrokes annual reports, yet the number of betting shops have increased.
So it is rational to agree with NERA when they say “contrary to the ABB’s assumption, some of the money no longer spent on FOBTs is likely to switch to OTC betting” and that would be to the benefit of the levy which horse racing relies on. But it would also require bookmakers taking their core business seriously and start taking bets again, something
betting shop punters like Mick McDermott are now campaigning about.