SBC News Voice of the Sports Betting Industry
Lee Richardson Chief Executive of Gaming Economics details opinion and context on the recent government announcement of an industry review of FOBTs and advertising standards…
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Just as autumn arrives, the UK government has this week launched its long-awaited review of gambling, which includes an investigation of gambling machines (including Fixed Odds Betting Terminals (FOBT)) and advertising.
Gaming Economics has examined the potential impact of FOBT restrictions before, and how significant the revenues from this betting channel have become to the British retail betting sector.
Since their launch from around 2000, they have grown to produce some £1.7bn in annual profits for the sector – over 50% of total retail earnings – and they’ve revolutionised the profitability-model of a typical betting shop. No-one is denying their popularity, or their profitability.
At their introduction within the UK betting shop market, there were around 9,000 betting shops, a figure which had declined from a peak of around 16,000 two decades or so before. At the turn of the new century, betting shops were in slow decline, and around a quarter of them were highly-marginal in profit terms.
Of course, it was the UK government who first enabled the arrival of FOBTs, by first allowing fruit machines into betting shops (Amusements with Prizes (AWPs)) in the mid-1990s. This followed the successful lobbying by the bookmakers to help betting shops mitigate against revenue losses to the then-new National Lottery, who could sell tickets to 16-year-olds and advertise freely.
Bookmakers quickly replaced AWPs with FOBTs, up to a combined-limit of four machines per shop. Since their introduction, betting shop numbers have been stable.
Today, Gaming Economics calculates that each FOBT earns, on average, a profit of a little over £10 for each hour it’s available for play within a betting shop. For many independent observers, and compared with the land-based casino industry, this seems neither excessive, nor exploitative, but the issue clearly splits opinion, and opponents abound.
These critics range from local authorities who want more control over the so-called ‘clustering’ of betting shops themselves, to the single-issue lobbyists who claim the machines produce problem gamblers, and want the products banned. Others – including players – say they simply want more ‘self-exclusion’ options and reduced stake limits.
Less than two years ago, the Responsible Gambling Trust, as part of its harm-minimisation studies, unveiled their research into FOBTs, which analysed over 6.7 billion individual bets, via 178 million gambling sessions made on 32,500 machines located in 8,297 betting shops. The academics could find no reliable proof of any evidence-based increase in the rate of problem gambling. Some of the media disagreed, and wrote their own interpretation anyway.
More objectively, the UK Gambling Commission’s own problem-gambling prevalence measurement studies, undertaken since 1999, has recorded no material increase in rates over the past fifteen years, a period which pretty much mirrors the life-cycle of FOBTs. Conclusive? The jury still appears to be out.
The government is also keen to receive evidence of the effectiveness of other, broader social responsibility measures across the gambling industry, including that around gambling advertising. The industry is also fearful of more advertising restrictions, especially surrounding live sports events, a particularly valuable means of stimulating betting demand and protecting market-share.
And that’s not all. Just last week, and after concerns were raised by the Gambling Commission, the UK Competitions and Markets Authority said they were launching their own inquiry into online betting companies about potential breaches of UK consumer law, including misleading promotions and unfair terms.
So the battle-lines are clearly drawn, and the government has asked for input to its consultative review by early December 2016. The industry will certainly be hoping the review stays true to its principles of relying only on evidence-based findings.
As Gaming Economics expects it will be spring 2017 at the earliest before any conclusions are reached, on any of these industry reviews, it looks a long, cold winter ahead whilst we wait for the outcome.
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Lee Richardson – CEO – Gaming Economics
