Bookmakers, staff, the authorities and horse racing clubs are amongst the victims of the new changes in the laws for the maximum limit of bets on the fixed-odds betting terminals (FOBTs) across the country. The calculations are that 4,500 bookmaker shops will be closed, 15,000 to 21,000 jobs lost and decrease in tax revenue of £1.1bn in 3 years. Read more to learn where things went wrong on the gambling scene.
Owners’ Perspective
Bookies run short of patience with the introduction of the new limits for the fixed-odds betting machines. The former strategy of few of the largest bookmakers in the UK was focused on opening as many as possible venues on the High Street as the legislation regulating the terminals did not allow for more than 4 of the machines in a single shop. Momentarily, with the new maximum betting limits of £2 per game, and not £100 as earlier, many of the shops will lose 50% of their income. Facing the current restrictions on bets, bookmakers are certain to shut down some of the unprofitable shops, solely established to get the extra 4 machines in-store or due to a lack of investment in other areas like sports betting. Likewise, Ireland bookmakers have ditched the FOBTs long time ago as the machines are illegal, and shops revenues are made via a sport-based business strategy.
Customers Well-Being
Although the gambling authorities recognize the importance of diminishing betting limits on gambling terminals, there are no further directions how online gambling would safeguard customers who will redirect their attention from the physical machines to the online ones where they can earn the money they have lost by playing with higher limits. Additionally, betters will also face higher pressure from bookshop advertisements and free bet offers to attract them inside the shops. Once the cash is lost, it is gone. Still, gambling addiction does not allow for making reasonable judgements of the problem, or the financial situation of a player. Bookmakers thrive on desperation. Individuals who gamble either have enough funds, and want more, or cannot afford to lose, and are desperate to win. What is more concerning is that management personnel often get annoyed when high-profile gamblers seek self-exclusion. They remain blind when customer funds are exceeding the threshold, and act carelessly enough not to verify the origin of the financial resources of a player. In such a way, money laundering can be easily prevented.
Community Protection
Criticized by society, bookmakers have not been acting responsibly during the years. They were rather focused on making instant profits and the opportunity that fixed-odds betting terminals delivered for the expansion of the business. Economic difficulties and increased taxes can also be the reasons for bookmakers to remain relaxed about the societal impacts of gambling. Perhaps, if bookmakers restricted bets and behaved with greater integrity, they would not need to close shops and discharge employees. Greed will be the sole driver for the plummeting profits in the following years.
Employees Rights
Experts assume that closure of betting shops will not solve the gambling problem, as customers are likely to shift to online casinos, but thousands of the employees occupied in the gambling field will be made redundant. “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.” Jim Mullen, Chief Executive of Ladbrokes Coral The chief executive of William Hills, Philip Bowcock, added that the constraints on the maximum betting amounts will also impact horse racing as each bookie pays £30,000 to get the media rights for broadcasting live scores. He also urges the Secretary of State to consider the research of the Responsible Gambling Strategy Board that interrogates whether stake cuts will have an impact on reducing problem gambling.
The Jockey Club Hit
The horse racing industry will also take a hit on their profits. The Jockey Club, running UK’s biggest horse racing tournaments will face difficulties despite the record of ten-year profits according to BBC news. The club estimates losses of about £50m while bookmakers contribute £270m to the horse racing industry. Added to that, both the most famous festivals, the Cheltenham and the Grand National only brought £48 in profits in 2018.
Additionally, the club is a non-profit organization established in 1750, meaning that all their profits are reinvested in their business model. The closure of betting shops will lead to the Jockey club will have fewer opportunities for generating income since they sell the rights of the live coverage of races to bookies. Consequently, that will affect the resources available for horse breeding, research and development, and racing. This will leave the Jockey Club to compensate for the damages. The chief executive of the club, Simon Bazalgette states that ‘the next steps will be to measure the impact of the changes in the sector and that if the sport collaborates, innovates and diversifies’ they can retain healthy profits and keep in good shape. When you consider the consequence on suppliers and horseracing, the picture becomes even more negative says the CEO.
The Financial Damages in Digits
| Shop to Shut Down |
Lost Jobs | Annual Loss of Taxes |
Tax Losses in 3 years |
Cuts to Local Authorities |
Horse Racing Damages |
|---|---|---|---|---|---|
| 4,500 out of 8000 |
15,000 to 21,000 out of 50,000 |
£45m | £1bn | £80m | £50m |
Total bookmaker shops are about 8000 in the UK. According to predictions of the Association of British Bookmakers, more than half (4500) of the shop will close after the introduction of the new limits on FOBTs. People who will lose their jobs would also be 1 to 2/4 of the employees in the industry. Between 15,000 and 21,000 job contacts will be dismissed. The average loss of taxes per year will be equal to £45m while for three years the sum will reach a billion pound. Of course, local authorities will also suffer from a decrease in the Treasury. Their exact suffering equals £80m. While the Jockey Club will be looking for opportunities to make up for the £50m drop in profits.
Separate bookmakers like William Hill make forecasts that 700 bookshops will be affected by the changes and 4500 of their employees. Ladbrokes will only close 71 of their 1000 shops, but the downsizing will successfully produce a bill of £50,000 costs per shop. It seems like the winner in the entire story is Paddy Power with none of their 320 shops being affected, as they were not counting on the terminal to get short-term profits instantly, as competitors seemingly did.
What Is the Next Step in the Strategy of the Losers?
While Paddy Power genuinely welcomes players with their exciting new £2 roulette games, other bookshops like William Hill and Betfred express a note of resentfulness by accusing the government of the damages. The gambling problem should be a shared responsibility of businesses and legal forces. Further measures that might be taken by bookmakers are negotiating their rent payments or being inventive with new terminals that allow bets up to £2 for which the player can place further £28 virtual chips. If the bet is a winning one, the player gets the £30 back and a prize up to £500. However, odds remain unfavourable, and it is more likely that gamblers lose £20 in a 2-minute play.