The UK government is resolved to go ahead with the introduction of a £2 maximum stake on Fixed Odds Betting Terminals (FOBT) in High Street betting offices.
The UK’s gaming regulator is under fire over a perceived failure to protect problem gamblers from FOBTs.
DEPOSITING with credit cards at online betting sites and casinos in the UK could become a thing of the past if the government considers last-minute recommendations.
At the eleventh hour, thinktank ResPublica submitted several recommendations to the government in a bid to tackle problem gambling.
The Department for Digital, Culture, Media and Sport’s (DCMS) 12-week consultation period closed on Tuesday, and the organisation took one last shot at reducing the number of players addicted to casino games or betting on sports in the UK.
The recommendations are unexpected since the media focus has been on the likelihood the government will reduce the maximum bet limit on fixed odds betting terminals (FOBTs) from £100 to £2.
While the media reported it’s a sure thing, UK bookmakers have labelled the reports the new Culture Secretary, Matthew Hancock, supports the £2 limit as a rumour.
“In addition to thousands of lost jobs and closed shops, a £2 stake, essentially a ban on FOBT content, would mean tens of millions wiped off racing’s income as each betting shop pays £30,000 in media rights,” William Hill CEO, Phillip Bowcock, said after denouncing the circulating stories.
But ResPublica is more concerned about the rate of problem gamblers in the country, recommending gambling companies pay a mandatory levy to fund treatment.
The policy, supported by the Labour Party, is based on the annual expenditure of problem gambling research, treatment, and education. According to the thinktank, the government spends more than £200 per person treating drug and alcohol addiction compared to problem gambling.
ResPublica stated in their submission that a one percent mandatory levy would fill the gap and go towards reducing the 430,000 people addicted to gambling.
Gambling charity, GambleAware, support the mandatory levy, stating that gambling companies currently contribute 0.1 percent of their gross gaming revenue to treatment programs. However, the organisation revealed many companies fail to honour the voluntary agreement.
The charity revealed it could only treat two percent of problem gamblers in the UK last year, due to a lack of funding, suggesting a ban on credit cards to bet online to reduce the risk gamblers take when it comes to wagering more than they can afford.
CEO of GambleAware, Marc Etches. said there’s a further two million at risk of developing a problem, and the charity wants to reduce the impact on these people’s lives.
While the charity supports the reduced maximum bet limit on FOBTS, Etches has urged DCMS not to ignore the rate of bets players can make on the machines. The maximum is currently £100 every 20 seconds, and although the stakes may come down, he wants the frequency changed too.
Deputy Labour leader, Tom Watson, is also among those lobbying the government to reduce FOBTs stakes.
“Anything less [than £2] will represent a capitulation to the lobbying power of the big gambling companies and will be letting down the families and communities that have been devastated by addiction to these machines,” he said.
But he added that it’s just one step in a broader strategy to tackle problem gambling incidences in the country.
“Once this decision is made the government needs to concentrate on other means of preventing addiction and properly funding treatment to help addicts recover,” he added.
Meanwhile, Parliament has been discussing the betting industry this week with the House of Lords urging bookmakers to get a grip when it comes to closing accounts.
Bookmakers have come under fire for being too quick in restricting punters accounts and closing them down, prompting politicians to urge bookmakers to be more transparent.
The House of Lord warned that if bookmakers left the issue alone, they open themselves to regulatory intervention, adding that rewarding winners ensures betting and racing grows.
The UK bookmaker industry predicts large-scale job losses as the government prepares to announce new limits for its fixed odds betting terminals (FOBTs).
At the end of October, the government announced it would undergo a 12-week consultation period to review FOBTs and the appropriate maximum bet limit. Proposals ranged from as high as £50 to £30, and as low as £2.
An official at the Department for Culture, Media and Sport (DCMS), tasked with the job of finding a new maximum from the current £100 eligible to place every 20 seconds, reportedly said a £2 limit is highly likely to be introduced once the consultation period ends on Tuesday.
Bookmakers, including William Hill, rely on the income generated from FOBTs, and investment bank Barclays estimated the betting company would lose £284 million if the government reduced the maximum stake to £2.
Anti-FOBTs campaigners have called for the reduction, stating the machines contribute to problem gambling rates and need to be reviewed to protect children and ensure a sustainable industry.
But the Association of British Bookmakers (ABB) said “most problem gamblers use seven or more different types of gambling products, therefore there is a challenge for the whole gambling industry to move from a position where there is a stable level of problem gambling in this country to one where problem gambling rates are decreasing”.
The ABB added that betting shops contribute significant sums of money towards problem gambling treatments, and the organisation continuously works to improve responsible gambling measures.
“A £2 stake is effectively a ban on FOBTs, would put 21,000 people out of jobs and have huge consequences for sports such as horse and greyhound racing,” the ABB added in a statement.
There was some hope for the bookmaker industry when Karen Bradley, who launched the FOBTs review, stepped into the role of the Northern Ireland secretary and Matt Hancock took over.
Hancock is a former amateur jockey and has been integral to blocking tighter regulations in the racing industry. However, local UK media has said he has been persuaded to favour the £2 limit, as he is of the belief they take money away from sports betting and wagering on the races.
“People think that because he is a big supporter of horseracing, he wouldn’t support this direction of travel, but actually it’s the other way around,” an insider told the Financial Times.
While sources have said DCMS is yet to make a final decision, the media is implying bookmakers will likely have to restructure their businesses.
A recent report has revealed British betting companies are already in strife, with the UK Gambling Commission (UKGC) finding betting shop numbers are at an all-time low. Since the regulator began recording the numbers in 2009, betting shops have gone from closing at a 100 per year rate to 300 every six months.
According to the ABB, there are 50 percent fewer high street bookies in the UK since the 1960s, when there were more than 16,500.
William Hill UK is already reviewing some of its subsidiaries, including its Australian division due to regulatory changes such as a ban on credit betting effective from February 2018.
It’s not clear if the betting company will sell its Australian betting site, or agree to merge with a local operator.
Six online casino brands under GVC Holdings have exited the UK gambling market just before the close of 2017, not long after the online gaming giant announced its official takeover of Ladbrokes Coral.
Owned and operated by Gaming VC, 50Stars Casino, Carnival Casino, Club Dice Casino, Casino King, Noble Casino and Magic Box Casino have stopped accepting UK players as of 28 December, 2017.
Two other brands, Casino Las Vegas and S Casino, will continue to operate in the United Kingdom until 31 January, 2018, but all other casinos and sports betting sites operated by GVC’s Bwin.Party brand will remain active in the UK.
The exits coincide with recent intense regulatory scrutiny from the UK government and only a month after GVC sold Headlong Limited and its Turkish-based operations, effectively removing itself from unregulated grey markets ahead of its costly merger bid with Ladbrokes Coral, most likely to ease stakeholder concerns while adding a healthy £134 million to its takeover fund.
The Isle of Man-based company have since secured a £4 billion deal with Ladbrokes Coral to create one of the biggest gambling groups in the world, continuing the trend of high-profile acquisitions of industry giants in recent years.
“The creation of one of the world’s largest listed sports betting companies, combining a portfolio of established brands, proven technology and leading market positions in multiple geographies, is a truly exciting prospect,” GVC Chief Executive Kenny Alexander said in a statement.
GVC Holdings will own 53% of the newly combined organisation once the deal is closed within the first half of next year, pending regulatory and shareholder approval.
Alongside their already strong foothold in the online market, GVC will have the biggest slice of the betting market in the region, including Ladbrokes’ 4,000 land-based betting shops in the UK, in addition to its significant presence in Australia, Germany and Italy.
The Ladbrokes name, meanwhile, will live on as another brand under GVC’s various businesses, which include Bwin, Foxy Bingo, Party Poker and SportingBet.
The successful buyout follows a string of earlier offers to Ladbrokes Coral in the last few years. In August, Ladbrokes reportedly rejected a £3.6 billion takeover offer because of a disagreement over the value of each company.
In 2016, GVC also proposed a merger, but Ladbrokes was in the middle of completing their £2.2 billion merger with Coral. Previous talks reportedly broke down due to GVC’s interests in unregulated markets, which it has since reduced significantly.
GVC, Ladbrokes Coral and the FOBT review
While GVC and Ladbrokes Coral are set to create another gaming giant, other industry heavyweights are quietly awaiting the British government’s Fixed Odds Betting Terminals (FOBT) review before making their own announcements.
Earlier this year, the Department for Digital, Culture, Media & Sport (DCMS) outlined four possible options on cutting maximum stakes of FOBTs, ranging from £50 to £2 per spin. The FOBT review officially began its 12-week consultation period of these reductions from October 30, the outcome of which will be announced in the second half of January, according to Reuters.
The potential reform is expected to see UK legislators reduce maximum betting stakes from £100 to the lowest proposed stakes of £2.
These land-based betting machines generate significant revenue for UK bookmakers including Ladbrokes and William Hill. Approximately 54 per cent of retail revenue for these operators come from FOBTs, but increased concerns about problem gambling in the country have pushed the United Kingdom Gambling Commission to take action.
Both GVC and Ladbrokes Coral confirmed they had agreed on a contingent offer between £3.2 billion and £4 billion, depending on the outcome of the impending UK government review, with GVC re-affirming it would make good on the deal even if FOBTs received a maximum cut in stakes.
Analysts have estimated Ladbrokes Coral would lose a whopping £449 million in gaming machine revenues in 2018 if the reduction is enforced.
Whatever the outcome of the FOBT review, GVC looks set to solidify its market position with its strong online business assets and Ladbrokes Coral will still get at least £3.2 billion. Other high street bookmakers and brick-and-mortar operators won’t be so lucky, and will most likely face heavy losses and increased consolidation in 2018.
WELCOME back to our weekly column on gambling changes from around the world. We take a look at what’s happening online and at land-based gambling venues in different parts of the world to keep you up to date.
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There’s a lot going on this week with some jurisdictions clamping down on gambling activity, while others look to expand. New gambling reforms prohibiting offshore providers have come into effect this week in Australia, while Cambodia is looking to attract international operators. Some US states are looking to legalise online gambling, though the process is a slow one. Meanwhile, Colombia is expanding its online gambling industry. Read on to find out more.
Australians could get a regulated online poker industry
The Interactive Gambling Amendment Act 2016 came into effect this week, and the final operators to exit blocked Australians from accessing their games. While offshore operators are targeted under the new reforms, some remain in the market as it is not technically illegal for Australians to gamble online. Aussies are advised to do their research and be safe when it comes to available online gambling sites.
But online poker may become regulated in the near future after a Senator announced that the government is considering legalising the online skill-based game. Senator David Leyonhjlem, who has been leading the Senate inquiry into online poker in Australia, revealed Communications Minister, Mitch Fifield, wrote to him to say his department would look into the possibility of a regulated online poker industry.
Meanwhile, a landmark court case involving Australian land-based casino Crown Resorts, slot machine manufacturer Aristocrat and a former poker machine addict has commenced this week. Shonica Guy is claiming the slot Dolphin Treasure, available in the Melbourne casino, is misleading as the symbol combinations and odds are not made clear to players. Counsel for Crown has argued that its basic common sense that the symbol combination is designed to impact winnings. The trial runs for three weeks before a decision will be handed down.
US states consider online gambling
Around five million residents in Florida are without power following the devastating Hurricane Irma but land-based casinos in the state are offering a refuge from the sweltering heat. Some of the states casinos, spared from the impacts of the Category 4 storm, have reopened with air conditioning, offering a respite for many residents. Unfortunately, the Mardi Gras Casino and the Miami Gardens’ Calder Casino didn’t hold up too well and remain closed due to damage.
The Pennsylvanian House of Representatives finally passed its budget this week, but online gambling hasn’t been included. Despite a previous draft budget including online gambling to address a gap in the budget, the new package is vague when it comes to the inclusion of online gambling. Instead, it plans to fix Pennsylvania’s severe billion dollar budget deficit by sourcing money from a variety of other areas, including public projects. The gambling expansion is likely video gaming terminals (VGTs) in bars and restaurants, even though the plan is not supported by the Senate. Once both the Senate and House of Representatives agree on a budget plan, they will then vote on what the gambling expansion means.
Meanwhile, a Senator in the state of Michigan has introduced an online gambling bill. Senator Mike Kowall, who already introduced an unsuccessful bill which proposed a legal online poker and casino game industry last year, is trying again this year. This time around, the bill includes a 15 percent tax on online gambling revenue, as well as a $USD200,000 licensing fee for five years, with an additional $100,000 to be paid for every year that passes.
Italy to expand online gambling industry
Italy is looking into expanding its online casino industry by opening applications to potential operators. The announcement has been a long time coming given the government planned the expansion in 2015. While information is limited, applications will be open from September 18 to 25, with 120 gaming licenses up for grabs. Applicants have two months to be prepared and will have to pay 200 million euros per license which will be active until 2022.
The Republic of Georgia cracks down on online gambling
The Eastern European country has announced plans to ban online gambling this week. While the Ministry of Finance is reportedly looking to introduce a bill which will prohibit all forms of gambling, some politicians are unhappy about it including Deputy Finance Minister, Lasha Khutsishvili. Khutsishvili said banning online gambling doesn’t work and added that the international practice is ineffective.
UK FOBTs review to cost bookmakers £150m annually
The UK Gambling Commission is raising awareness when it comes to students and gambling. The UKGC Executive Director for research, Tim Miller, revealed that two in three university students in the UK gamble and while many do it without experiencing harm it can lead to issues like debt, poor attendance and long-term problems. The UK gambling regulator has published tips for students in relation to responsible gambling on its website.
Meanwhile, the impending Fixed Odds Betting Terminals (FOBTs) review could cost UK bookmakers £150m annually, according to the Financial Times. The review is expected in the coming months and while many are calling for the maximum stakes to be reduced from from £100 to £2, a compromise of £30 is reportedly being considered. Still, betting companies such as William Hill, will lose millions.
Colombia grants second gambling licence
Colombia is in the process of regulating its online gambling industry, with the country’s regulator, Coljuegos, granting its second online gambling licence this week. The lottery and chance games operator, Corredor Empresarial S.A, received the five-year license which will allow the firm to operate sports betting, slot machines, roulette and other gambling games at Betplay.com.co. The first license went to Sportium, which is a joint venture between UK bookmaker, Ladbrokes, and Spanish gaming operator, Cirsa.
Cambodia to expand gambling industry
Cambodia is reportedly in the process of finalising a draft version of a new gambling law. The reforms, set to be reviewed by cabinet members at the end of the month, will allow Cambodia to open up its online gambling industry to international operators. To compete with Singapore, the draft law reportedly keeps tax rates low for international operators. The Cambodian government is hoping to increase tourism and foreign investment through the new law.
Czech Republic to introduce receipt lottery
The Czech Republic will release a new receipt lottery by October to fight tax evasion. The new electronic system will see receipts given to players who purchase lottery tickets, with players eligible to register via a mobile app or website. Players are limited to one receipt per day to limit the chance of illicit purchases. According to the Ministry of Finance, Ivan Pilný, the scheme has been created to tackle tax evasion and benefits should exceed operational expenses.