Campaign to reduce FOBT stake to £2 clears Treasury hurdle and enters the final furlong

Posted On: 
26th April 2018

The Campaign for Fairer Gambling writes about recent news stories covering the Treasury and the potential impact of changes to FOBT stake levels which are likely to be announced shortly.

Betting shop
Credit: 
PA

A week’s a long time in politics, but it only took the Treasury a day to change course. On Monday, a proposed “backroom deal” between the Chancellor and the bookies over the maximum stake on Fixed Odds Betting Terminals (FOBTs) was reported by The Times, but by Tuesday the Treasury said it wouldn’t stand in the way of the government’s decision if it favoured a reduction to £2 a spin.

Treasury should take into account the impact of government policy on the economy as a whole, and the subsequent revenue impact, rather than the tax derived from a specific sector in isolation. Landman Economics has found that for every £1 billion lost on FOBTs, a net of 16,500 jobs are lost in the wider economy, due to the machines being a labour unintensive form of consumer spending. If the stake is reduced to £2 a spin, a proportion of FOBT revenue will switch to over the counter betting, a less harmful and more labour intensive activity. While the number of FOBTs, and the yield they generate, has gone up in recent years - now accounting for more than half of betting shop profits - the number of people employed by the bookmakers has gone down, with operators adopting the risky policy of lone working.

FOBTs are a job destroyer both within and outside the betting industry, while the bookmakers pressure their staff to push customers in their shops online, where the operators pay 15% “point of consumption” tax, which applies to where the consumer is rather than the offshore operator. There are rumours that the Treasury will seek to recoup any gambling related revenue it loses out on from a FOBT clampdown by raising duty on online gambling. Analysts Goodbody estimate the shortfall to Treasury from gambling taxes will be about £194m if there’s no transfer to other gambling activities, and this could be made up by increasing online gambling “point of consumption” tax from 15% to 19%.

As the Campaign’s Matt Zarb-Cousin wrote in an article for Times Red Box: “Treasury’s blessing feels like the final hurdle cleared in the long 6-year campaign against FOBTs. Not least because it’s the proverbial basket that contains most of the bookmakers’ lobbying eggs, having run their own scaled down version of Project Fear: warning of the “economic risks” of doing what every other country in the world does by not allowing high stakes roulette at three spins a minute in low regulation high street premises.”

Paddy Power disowned the outlandish claims of the bookie-funded KPMG report, which the Association of British Bookmakers (ABB) quoted from selectively, despite refusing to publish the report in full. In the course of their desperate lobbying, they’ve hugely overstated the impact of a £2 stake, which led to a drastic drop in share prices when Treasury announced it would support £2. The Campaign warned the Financial Conduct Authority that a “false market” risked being created, and it looks like that’s now happened.

With a majority of MPs in the House of Commons backing £2 a spin, including 23 Conservative MPs, the Labour Party and the Lib Dems, most SNP MPs and some DUP MPs on the record as backing the Campaign’s objective, and with the government still obliged to “try to reach agreement” with the 93 councils demanding £2 a spin under the Sustainable Communities Act, it feels as though the Campaign is reaching the final furlong.