The culture secretary has announced that the maximum stake on fixed odds betting terminals (FOBTs) is to be cut from £100 to just £2 under new proposals.
The move follows a review by the Gambling Commission in March, which recommended that restrictions be placed on the amount that can be placed on each game. While the commission recommended the limit be capped at £30, the Department for Culture, Media and Sport decided to go a step further and bring it down to £2 – the price of a regular lottery ticket.
Matt Hancock said the change, which will require parliamentary approval, will reduce the government’s tax revenue from FOBTs, but that this will be offset by an increase in the duty applied to online gambling.
What effect will it have on consumers?
Commentators have welcomed the decision and the effect it will have on reducing potentially irresponsible behaviour.
Matt Zarb-Cousin, a spokesman for Fairer Gambling, said: “The government’s decision to cut the stake back to £2 is the right one and must be enacted as soon as possible.”
Sports minister Tracey Couch, who led the review, said it will be accompanied by a range of measures design to encourage responsible gambling that includes affordability and age checks.
How will bookmakers be affected?
Industry reaction to the proposals has been mixed, with a prevailing attitude of cautious optimism.
Paddy Power Betfair said the move would play a further role in improving the sector’s image. Peter Jackson, the firm’s chief executive, said: “We welcome the significant intervention by the government today, and believe this is a positive development for the long-term sustainability of the industry.”
William Hill, which saw share prices rise in May following the legalisation of sports betting in the US, said the government had presented the firm with a “tough challenge”.
Chief executive Philip Bowcock added: “It will take some time for the full impact to be understood; for our business, the wider high street and key partners like horse racing.”
The impact on horse racing
The British Horseracing Authority (BHA), which receives significant investment from bookmakers as a result of levies and the payment of media rights and sponsorship of races, said it would work closely with the government to respond to the decision.
The culture secretary is the MP for Newmarket, the birthplace of horse racing, and revealed he is liasing with the BHA on a possible expansion of the levy, which would include global horse racing bets placed in the UK.
Mr Hancock added: “I love horse racing and there is an interaction between the sport and the gambling industry. We are working with the British Horseracing Authority on a package of measures to mitigate the impact on horse racing.”
When will the effects be felt?
Analysts agree that it is too early to predict the true impact of the proposals, with the BHA noting that current forecasts do not take into account the potential savings that an extended levy could make.
Additionally, it remains to be seen whether the igaming market will see a migration of custom as a result of the maximum stake reduction for in-store games and how the market’s future could be shaped by the sanctions.
The Department of Culture, Media and Sport assured the industry that a period of adjustment will occur to enable the betting and horse racing sectors to make necessary adaptations.
As this adjustment takes place, we will continue to keep a close eye on developments and the potential effects on the sector.