Will Betting Stakes Be Restricted? Potential Effects For Bookies and Punters
There was much debate and controversy over the move to limit the maximum stake applied to Fixed Odds Betting Terminals, in spite of the fact that they have been called ‘the crack cocaine of gambling’ and ‘a blight on society’. The feeling from those that oppose the stake reduction is that people should have the choice of what they want to do with their money and that restricting that is in contradiction to the rights that gamblers have to decide when they should restrict their own betting.
Indeed, the Association of British Bookmakers suggested that people would simply shift the things that they bet on, so it won’t help people anyway.
The ABB had a vested interest in the matter, of course. FOBTs are one of the most profitable things that bookies have ever had available to them, with each machine making in excess of £53,000 per year and there being more than 33,000 of them in shops around the country.
The ABB suggested that more than 4,000 shops would close and 21,000 people would lose their jobs, though those reports were disputed by independent experts. The point being that there was a large degree of opposition to the government’s decision, but did they go far enough? Is there an argument that all betting stakes should be restricted in order to stop people from losing too much money?
Betting Stakes Already Restricted – When It Suits
Speak to a bookmaker or a spokesperson for the Association of British Bookmakers about stakes restrictions and they’ll tell you that it’s an outrageous thing to do.
They will argue about the effect on the economy, the restriction of people’s freedom of choice and that such a restriction would cause job losses within the sector. Yet that would be a slightly disingenuous line for the bookies to take when you consider that they’re happy to limit people’s accounts if it seems as though they’re winning too often.
A teacher from Yorkshire named Neil Smith was told by a bookmaker that limited his maximum stake on a 4/1 horse that his betting pattern was ‘unprofitable’ for them and that they ‘are a business’. That is one anecdotal example of how bookies are taking it upon themselves to restrict accounts when it suits them.
The head of the Secret Betting Club, which is an independent service that offers advice to members, believes that the industry is using the improvement in IT services to its advantage and creating sophisticated algorithms to weed out successful gamblers.
It’s always been the case, of course. Bookmakers have long declined to take bets of punters who are too successful, with Michael Tabor, now the owner of BetVictor, being banned from placing bets with Ladbrokes during the 1980s. Yet in those days you needed to be a big fish, taking large amounts of money from the bookie, in order to get on their radar. Nowadays that isn’t the case, with even regular punters finding themselves on the receiving end of betting restrictions if they win too often.
With that in mind, then, isn’t it a bit hypocritical for bookmakers to argue against betting limits when they apply to people who tend to lose a lot of money when they’re happy to put them in place on those who win a lot?
A survey conducted by the Horserace Bettors Forum in 2016 discovered that 878 respondents had had about 4,500 accounts suspended by bookmakers because they were too successful. Many are calling for the bookies to play fair moving forward.
Minimum Bet Rules Could Be The Way Forward
If parliamentarians are wondering how they can find a way through the current situation without upsetting either bookmakers or punters the they might want to look at how Racing New South Wales in Australia handled the proliferation of bookies restricting winning punters’ accounts.
From the start of October 2016 bookmakers in Australia were forced to take a bet from any punter with the understanding that they were only allowed to win up to a certain amount for horse racing bets. It meant that accounts were not allowed to be restricted and punters knew where they stood with the bookies in terms of being able to place bets.
The minimum bet law applies to different races in different ways and it also varied across the different Australian states, but it ensures that punters feel as though the bookmakers are being forced to be fair in taking bets from them even if they’ve been consistently successful.
It’s interesting to note that bookmakers didn’t put up too much of a fight in Australia and that might have something to do with the fact that the Australians are reportedly the biggest gambling losers anywhere in the world…
What Stake Restrictions Would Mean For The Economy
It’s difficult to talk about the exact outcome of any betting restriction on the economy without knowing exactly what format that restriction would take, but we can look towards the minimum bet restriction on FOBTs to give us some clues.
Fixed Odds Betting Terminals are taxed quite heavily, which originally led the Treasury to be concerned about the reduction in in maximum stake from £100 to as little as £2, believing that the Gambling Commission’s recommendation of a cut to £30 was the most sensible.
In 2017 the machines generated in excess of £1.8 billion in tax revenue, with government estimates suggesting that the reduction to £2 could cost as much as £5.5 billion over ten years.
The original plan was for the stake reduction to come into effect in 2020, but pressure from MPs resulting in the Department for Culture, Media and Sport to change their approach and introduce it in April of 2019. The potential loss in revenue from the reduced tax on winnings is covered by a change in the Remote Gaming Duty that was designed to make up the shortfall.
The shortfall was expected to be around £400 million, but the increase in the RGD to 21% was actually likely to result in the government making more money in tax to the tune of around £260 million. They would have missed out on that money if they’d delayed the stake reduction at the same time that bookmakers would make around £500 million in profit.
That is obviously just looking at the restriction of stakes on one aspect of betting, so how much of a hit would the government take by applying a cap to betting stakes across thew industry? In 2017 FOBTs were responsible for around 57% of the profit made by over-the-counter betting shops, so the reality is that any sort of cap on betting overall would be likely to see betting shops closing on the high street.
Not A Black & White Issue
It’s believed that the number of problem gamblers in the UK rose to more than 400,000 in 2017, whilst up to 2 million people were at risk of developing problems further down the line. How much would a reduction in the maximum stake make a difference for such people?
The reality is that something needs to be done for those that can’t control their own betting habits, with the indications being that the self-exclusion systems in place aren’t doing enough for those with the biggest problems.
The figures suggest that problem gamblers cost the government around £1.2 billion per year, principally because of hospital in-case services, mental health care and costs brought about by Job Seekers Allowance claims and social housing for those that have lost their jobs because of their gambling habits.
It’s easy to look at the situation surrounding gambling and see it as a black and white issue, but for the government decisions aren’t quite so easy. Reducing the maximum stake might help the 5% or so of people that have issues with gambling, but it does so at the cost of gamblers that don’t have a problem and enjoy the locking of horns with the bookmakers that takes place every weekend.
There’s also the fact that the money taken from bookies in tax is put towards the likes of social housing, welfare and other areas of the country’s spending that would be reduced if the amount of tax the government could take was also reduced.
Add to that the likely job losses that would result from bookmakers shops having to close and it paints a more complex picture than those entirely against bookies making money would be willing to accept.
There’s also the fact that high street bookmakers are likely to end up having to close the doors of numerous shops over the next ten years regardless. The situation on the high street is difficult for bookies even without the FOBTs, thanks in no small part to the growth of the online sector.
Ladbrokes Coral have announced that they are likely to have to close around a third of its high street stores, but their way of trying to avoid making people redundant has been to sign customers up to their online platform instead. If online gambling continues to thrive, the sector is unlikely to end up losing as much money as it fears. That being said, bookmakers are far more interested in profits than in not making losses.
