Restrictions on Fixed-Odd Betting Terminals further impacts high street
17 July 2019 by Ellen Petersen
Following previous commentary here and here about the future of the high street, it appears retail use on the high street is further impacted by news that Britain’s bookmakers are to shed more than 12,000 jobs in the wake of stricter regulation of fixed odds betting terminals (FOBT). These cuts represent nearly 12% of people employed in the UK gambling industry.
To clarify impact: the House of Commons briefing paper Number 06946 (6 February 2019), says FOBT are electronic machines, sited in betting shops, which contain a variety of games, including roulette. Each machine accepts bets for amounts up to a pre-set maximum and pays out according to fixed odds on the simulated outcomes of games.
The briefing paper also set out that the Gambling Act 2005 classifies FOBTs as B2 gaming machines, with up to four machines sited on betting premises. The maximum stake on a single bet is £100, the maximum prize is £500. There are 32,956 B2 machines in Great Britain (Gambling Commission statistics, November 2018). The gross gambling yield (GGY) from B2s was £1.7 billion.
The briefing paper said that the Government would take action to protect vulnerable people, including strengthening protections around gaming machines, online gambling, gambling advertising and treatment for problem gambling and so, restrictions introduced in April 2019, cut the maximum stake on FOBT from £100 per spin to £2 has in fact, led Ladbrokes Coral, William Hill and Betfred, to announce plans to shed jobs, blaming the loss of a product that contributed about half of their annual high-street income.
William Hill said earlier this month that it could close 700 high-street shops, putting 4,500 jobs under threat and it is understood that William Hill has asked its landlords for rent cuts of up to 50% in a bid to keep shops open. Ladbrokes owner, GVC, has already said 900 shops could close, threatening 5,000 staff and Betfred has predicted up to 500 closures, which would reduce its headcount by 2,500.
Having said all this, The Guardian (online 4 July) has reported that “gambling firms’ high-street betting empires were in decline before the stake cut, as more and more punters switch to online gambling brands, often owned by the same businesses,” as indicated by industry statistics. Indeed the Financial Times on 31 March reported that the larger bookmakers were unsurprisingly and presumably in anticipation of the new stake restrictions on FOBT, now focusing on online gambling.
It has been reported that William Hill’s capital expenditure on online operations was £50m in 2018 and will be the same this year. By contrast, its investment on retail operations was £20m-£30m last year and £10m-£20m this year, even though they accounted for 55 per cent of revenues in 2018 (Financial Times).
The briefing paper concluded that “the Government has been clear that protecting vulnerable people is the prime concern, but that as a responsible government it is also right to take the needs of those employed by the gambling industry into account…”. Further, Government expectation was that the “gambling industry would work with it to reduce the effect of any impact on jobs and to support employees that may be affected…”. It remains to be seen how that pans out, both for the high street and for those affected by the new restrictions, although the ethical question remains, that vulnerable people must be of primary concern.
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