Campaign for Fairer Gambling: DCMS does not believe the bookies – so why does the Treasury?

Posted On: 
4th June 2018

The Campaign for Fairer Gambling writes that "DCMS has made the right decision" on fixed odds betting terminal (FOBT) stake levels but urges the Chancellor and the Treasury not to delay an already lengthy process, and introduce the new stake levels promptly.

Credit: 
PA

The most recent noise from the Association of British Bookmakers (the ABB) was dutifully reported as if it was fact by the Racing Post, an organ with a commercially symbiotic relationship with the bookies. A spin-person for the ABB was quoted, saying: “Betting shops have continued to close and nearly 1,000 good jobs lost on the high street in the past year alone.”

The statistic of the number of job losses is from the latest Gambling Commission data based on the year to end March 2018. The actual number is 845, but there is no explanation of how many of these are full time positions. The statistics are compiled from bookie provided data, for which there are no penalties applied by the Gambling Commission if there are any errors or omissions.

There were 279 shop closures during that period, of which over half were in the major corporations. This was always to be expected as part of the cost savings of the Ladbrokes/Coral merger and the Betfred/Tote acquisition of shops that need to be disposed of from that merger.

The fall in independent operator shop numbers is a direct result of the predatory corporate operators in the ABB. Shop clustering due to FOBTs, remote gambling adverts with shop cross-marketing and better deals with FOBT suppliers have all played a role. Operators that have opened two shops a stone’s throw apart on a high street may have to close one, but they’re likely to be replaced by more productive outlets, such as this one in Bolton.

It is clear from the decision by DCMS to cut the FOBT maximum stake from £100 to £2 per spin that the ABB has eroded its credibility, after years of false and inconsistent claims. Most recently, the ABB protested that “independent expert advice warned that this would simply shift people to alternative forms of gambling”, while also claiming Treasury tax revenues would be impacted. They didn’t explain who this expert was, either.

The Campaign provided two new documents to the DCMS gambling review. One was a report by an insider on the misguided nature of the key Responsible Gambling Trust (RGT) research which reported in 2014. The other was by Dr Howard Reed of Landman Economics, highlighting the flaws in the Responsible Gambling Strategy Board (RGSB) 2016 advice to DCMS, which relied on the misguided RGT research.

Additionally, the Gambling Commission provided advice to DCMS on February 18 2018, on the same day its chief executive Sarah Harrison departed, and this advice relied heavily on the RGSB advice. Again, the Campaign was able to identify through excellent analysis by Dr Howard Reed all the flaws in the Gambling Commission’s weak recommendation on the FOBT stake, opting for a cut to “£30 or less”.

But the Gambling Commission left it up to government, stating £2 would be consistent with their advice. So if the bookies decide on a Judicial Review, they will have to overcome the recommendation of the statutory adviser to government, and contend not just with government lawyers but friends of DCMS, such as the Campaign, providing evidence to contradict the bookies’ claims.

As all FOBTs are server-based, the stake reduction could happen overnight, with a software update. But new regulations have to be approved by the EU, and be laid before Parliament before being enacted in either October or April.

October 2018 would have been possible, but Treasury is insisting that gambling revenues should not be impacted, so is proposing increasing remote gambling point of consumption tax, and that the reduction to £2 a spin is implemented at the same time as this tax increase comes into force – most likely in April 2019. It was a Treasury error to set remote gambling tax as low as 15%. There is no reason that a virtual sector should have any lower rate than the equivalent bricks and mortar sector.

Factor in that many remote gambling operators went offshore to avoid taxes and organised under the Gibraltar Betting and Gaming Association to go to EU courts to try and defeat Treasury, and the gentle kid-glove treatment by Treasury is even harder to fathom.

Now consider that Treasury claims that betting shops are “proven low-risk” venues for money-laundering despite the Gambling Commission claiming they are high risk. Also consider that George Osborne blocked an earlier FOBT review and that under his editorship the Evening Standard regularly provides puff pieces for gambling operators.

After a two-year gambling review, DCMS has made the right decision to go for a reduction to £2, but every day that goes by without implementation the bookies rake in another £5 million. The Chancellor is delaying an already lengthy process, so at the very least must increase remote gambling tax in this year’s Budget to speed up enacting a £2 stake on FOBTs.