On the 1st of April 2019 new regulations came into force that restricted the maximum bet punters could make on a Fixed Odds Betting Terminal (FOBT) in their High-Street Bookmakers.
The maximum bet that could be placed on a single wager on a FOBT dropped from £100 to £2.
In the few short weeks since the restrictions came in, some Bookies have reported a massive drop in revenue from stores of nearly 50%
Given that FOBTs account for an estimated £1.8M of revenue every year, is this move a “Thanos-snap” for the industry?
Will half of the bookmakers shops (and jobs) be turned to dust before our eyes like the scenes from the latest Marvel blockbuster Avengers movies?
In this article I will look at:
The Background to FOBTs
Fixed Odds Betting Terminals, or FOBTs, were introduced to High Street bookmakers in the UK in 2001.
Unlike traditional Slots Machines, which normally took pride of place in a Bookies, these machines offered a huge variety of games. From video slots, virtual racing and bingo to traditional Casino games like Poker, Blackjack and Roulette.
Results were determined by Random Number Generators and the odds of winning (the Return To Player) were in the 90% range for slots and 97% for Roulette – mimicking the odds for real-life games.
Slots have always been a lucrative money-maker for Bookmakers and Casinos, but it was the Roulette that really caught on with punters, who found it easier and quicker to play than visiting the local Casino.
Whereas the largest bet that could be placed on slots was usually £2, the largest bet that could be placed on Roulette was £100. So the potential winnings were higher.
FOBTs proved very popular with punters. And they were soon increasing in number across the UK.
If you have ever wondered why there are so many Bookmakers so close to each other these days, sometimes even the same company, then it is because of FOBTs.
Regulations meant that each Bookmakers Shop could only have a maximum of 4 FOBTs.
So the Bookies just opened more Shops to house more FOBTs.
More shops, more jobs, more revenue. Everything was looking rosy…
Why the Restrictions Were Brought In
Gambling is, or should be, a fun pastime. But for some people – about 1.4% of gamblers according to Govt statistics – it becomes a serious problem.
Unfortunately, as with Alcohol and Prescription drugs, some people do develop a problem with addiction and it can ruin their lives, as well as the lives of their families.
It’s always been like that I’m afraid.
But FOBTs allowed punters to place huge roulette wagers with the potential to have a spin every 30 seconds. The possibility of losing thousands in a matter of minutes was very real.
Of course the Bookies would argue that it is a matter of choice and the option of betting thousands on a single horse race has always existed, and still does.
They would say that, if a punter wants to bet £1000 they will. One way or another.
But pressure was beginning to grow and horror stories around addiction to FOBTs gained nationwide coverage.
There have always been advocates for making all gambling illegal. And FOBTs were providing them with a lot of ammunition.
There was also the money-laundering angle.
Any physical Casino or betting shop is vulnerable to people using them for money laundering.
Basically someone can put cash into a FOBT, win or spend just a fraction of it and then withdraw it as a voucher or even have the winnings put into their online account.
If anyone investigating their earnings was to query where the money came from, they could point to the winnings and there would be evidence to back them up.
FOBTs didn’t initiate this practice – it has been around for decades – but they did make it much easier.
Another reason for the Government to look closely at them.
The writing was on the wall for FOBTs
How the Bookies Have Reacted
The first wave of pressure on Bookmakers came a few years ago.
As already mentioned, they were limited to 4 FOBTs per shop. So they opened more shops – sometimes literally yards apart.
Then as the pressure increased, they introduced the ability to set deposit limits and time limits on FOBT sessions.
They also introduced regular updates for punters on how long they had been playing and how much they had deposited. Asking if they were sure they wanted to continue.
Along with increased marketing of bodies like GamCare and the National Gambling Helpline inside shops, the Bookies felt they were doing everything possible to warn customers of the potential negative effects of gambling.
However the Government, backed by the Gambling Commission, pushed ahead with the plan to restrict maximum bets to £2 on roulette.
Protecting punters from potentially massive loses, while at the same time drastically reducing the revenue for the bookmakers.
Despite making some changes, such as increasing the minimum roulette bet from £1 to £2 and making the spins run much faster, it looks like the drop in takings is disastrous.
I spoke to one bookmaker employee who says they had already been warned of shop closures and redundancies before the restrictions came into force.
I also spoke to a few punters who said that the shops were now “dead”. Where the often had to wait to play a FOBT, they now were often the only players in the shop.
What Could This Mean for the Future?
It is unclear how all this will pan out. The FOBT boom has lasted nearly 20 years and made tens of billions for the Bookmakers.
But it looks like it has come to an end. Some may mourn it’s passing while others celebrate.
It is speculation at this point, but i can see this as definitely being a “Thanos” moment.
I suspect half of nearly all Bookmakers shops to close in the near-future. This will obviously impact jobs too and the economy as a whole.
The knock-on effects will be massive.
And unlike the Avengers, there may be no one to come to the rescue and put things right.
Or I could be completely wrong, of course, and the Tony Stark of High Street Bookmakers might have a great plan up his sleeves.
No spoilers here, just speculation.