Earlier this week, betting shares took a big hit in anticipation of a strict crack down on FOBT machines in the next few days. FOBTs have, rightly so, been the talk of the industry for what seems a long time now. With the 12 week consultation period ending yesterday, ministers are expected to restrict the maximum stake from £100 to £2.
Bosses within the betting industry believe such a restriction will have a huge impact on the industry and are therefore considering a judicial review.
What are FOBTs?
- FOBTs are ‘fixed odds betting terminals’ located in most high-street betting stores.
- There are currently around 34,000 FOBTs across the UK.
- Current limits mean gamblers can stake up to £100 every 20 seconds on games such as Roulette and slots.
The odds of winning on these machines is incredibly low, 36/1 if you’re playing Roulette. Not many people would wager £100 on a horse with odds of 36/1 but their addictive nature means FOBTs still draw punters in.
Current limits state that the maximum spins per minute is three, the maximum stake is £100 per spin and each bookie shop is allowed up to four machines. Due to the speed of play and the huge number of machines across the UK, this equates to large profits for the betting firms.
In 2017, gamblers lost £1.8 billion through FOBTs, a record amount that has been increasing over the past 5 years. On average, punters lose around £5 million every day of the year on FOBT machines.
What makes them so addictive?
Punters are addicted to fixed odds betting terminals. Why that is, I’m not sure. Few sane gamblers would stick £100 on a horse with odds of 36/1, so why would they on Roulette?
Furthermore, punters are known to chase their losses. With a spin only taking 20 seconds, surely one more isn’t going to hurt… This situation seems to be one many punters find themselves in. Justyn Larcombe, a middle-classed accountant, is no different. He lost £3,000 in one hour through a William Hill FOBT. After this huge loss he went on to say ‘Got to keep chasing these losses. Then it will be the big one’.
With the rapid rate of play combined with the huge maximum stake, that next spin can lead to no end of problems. Punters spend and borrow more than they have, leading to financial difficulty and sometimes more serious crimes.
Have you ever wondered why pay do loan shops are often located right next to bookies? It’s no coincidence!
As you can probably understand, FOBTs are incredibly controversial. They are deemed the ‘crack cocaine’ of gambling due to their addictive nature and severe problems they cause some punters. For a while now, anti-gambling organisations and MPs have been calling for a review into FOBTs in the hope of restricting the maximum stake.
Ever since the Government conducted their triennial betting review back in 2017, they’ve been under a considerable amount of pressure to come down heavily on FOBT machines, specifically targeting the maximum stake.
The industry expected this restriction to be between £2 and £50, however most thought this would land on the more lenient side. It appears not!
According to the Sunday Times, ministers are likely to cut the maximum stake to just £2, a move that will have significant impacts on the betting industry and punters alike.
Who’s going to be affected?
The aim of this restriction is to help tackle the hidden epidemic of gambling addiction and to reduce the number of problem gamblers in the UK. It’s estimated there are about 430,000 people who suffer from gambling related issues in the UK. A figure that has been on the rise in recent years.
The new restriction is undoubtedly going to benefit the gamblers in the long run. With a maximum stake of just £2, punters can only wager £6 per minute compared to the £300 per minute possible before the restriction.
This is great news for people like Justyn Larcombe who lost £3,000 in one hour playing Roulette on a William Hill FOBT.
There’s no denying it, the bookies make a considerable amount of money from FOBTs.
In a report released by the UK Gambling Commission, it emerged that each machine brings in an average of £56,887 a year. When you consider each bookie has a bank of up to four machines, the numbers soon start adding up.
As with most retail sectors, high-street bookies are struggling to stay profitable. More and more betting shops are closing with the future of the industry on a knife edge. Arguably, FOBTs are one of the only revenue streams keeping the high-street stores going. A cut to the maximum stake could result in job losses and store closures across the country.
Here’s what William Hill Chief Executive, Philip Bowcock said:
‘The impact of this rumour on our share price this morning illustrates the drastic impact such a move would have on the retail betting sector.’
And the boss of Ladbrokes Coral:
‘The industry has also always made it clear that a cut to stakes will have serious consequences – resulting in shop closures which will ultimately affect jobs, tax revenue and the funding of racing.’
In the wake of the latest rumours, shares at Ladbrokes Coral were down 9% and William Hill were down 12% after Monday trading. PaddyPower Betfair, who have a lower high-street presence, dropped 2.5%.
Earlier this week some betting firms saw £660 million wiped off their stock market value in response to the latest news.
So we know the bookies high-street stores are going to take a hit but will matched betting be affected?
Is Matched Betting affected?
Thankfully for us, matched betting is unlikely to be affected. Granted these restrictions will have major impacts on the bookies and their bottom line is going to take a hit. But matched betting is not generally affected by what happens in the retail side of the betting industry.
We’re more interested in the digital gambling sector and where that’s heading. At the minute the horizon is looking very bright for the online sector. Let’s hope this remains the case.
Bookies change focus to digital sector
The future of the betting industry is online and high-street bookies may see this crackdown as an opportunity to focus more on the online gambling sector. The retail side is clearly very vulnerable and struggling to make ends meet. I wouldn’t be surprised to see certain bookies increasing their online marketing efforts in the wake of the FOBT restriction.
Such changes would benefit matched betting no end. The more free bets and bonuses the bookies hand out, the more money we can make.
Matched betting in the future
Matched betting is here for the long haul and this technique is currently at its most profitable. There’s no better time to get started.
As long as the bookies are still offering free bets and bonuses to entice customers, then matched betting will still be the number one way to make money online. In my opinion, this is very unlikely to change in the near future. We’re still in the early stages of online gambling and the future is looking very bright!
Happy matched betting 🙂