The FOBT Ban: Did it Kill UK Gambling?
By Alex Smith May 19, 2022
The UK government decided to reduce the maximum stake on fixed-odds betting terminals (FOBTs) a couple of years ago. Players can no longer wager £100, with the maximum stake now capped at just £2. Bookmakers had lobbied extensively against the move, but it passed anyway.
So, what exactly was the result of this move, and has it killed UK gambling? Let’s find out.
What Are Fixed Odds Betting Terminals?
A fixed odds betting terminal — known in the UK as a “fob-tee” — is a state-of-the-art electronic gaming console that allows players to play a wide variety of slot machines and casino games. They are usually found in betting shops throughout the UK, and they were first introduced in 1999.
FOBTs allow players to place a wager on the outcome of many different games and events, and the games that players are playing are required to display the estimated RTP of the game.
As a general rule of thumb, most of the FOBTs in the UK have an RTP ranging between 90% to 94%. Up to four FOBTs could be placed in any single betting shop in the UK, and in the last ten years, they made up a significant portion of the revenue the betting industry in the UK made.
However, these gambling machines caused some significant issues with some players. The gambling-related harm they caused was even dubbed ‘crack cocaine gambling’ by many due to their addictive nature and the speed at which players could lose money while playing them.
What Was the Problem With Them in Betting Shops?
With every British bookmaker choosing to have as many as four FOBTs in their shops, it soon became apparent that these machines were beginning to cause issues. Below, we will cover some of the critical problems these machines were said to cause in gambling areas.
High Rate of Addiction
FOBTs were shown in multiple studies to produce significantly more damage in problem gamblers than other forms of gambling like online gambling. Gambling addiction rates went through the roof when the FOBTs.
Indeed, it came out that the betting shops were deliberately targeting players on these machines, as the Guardian uncovered in one investigation. They spoke to a deputy manager at one of the UK’s major high street bookmakers, who told them:
“Profit was very much the end game. If a customer asked us to be cut off, we could do that, but otherwise, there was minimal support we could give people. It created difficult situations for us when we would see someone well-known in the area put thousands of pounds into the machines and not be able to intervene physically. I don’t think my employer cared much about having a duty of care to customers. They want people to keep gambling, but it often feels cold and heartless working there and getting caught up.”
The term “the crack cocaine of gambling” started to be used more frequently, and British media was notoriously anti these machines. There were hundreds of stories published about people whose lives had been ruined by fixed odds terminals. One touching story that went viral in the UK was that of Ray. Speaking about the FOBTs, he said:
“The machines control your life. Sequences of numbers would come up, which regular players would learn, and you would quickly build up large sums. But instead of cashing in and walking out, you would convince yourself you knew what the following number would be, but it seldom came. More numbers would appear and force you to continue until you run out of stake money.
Ray admitted, in 2013, that he was struggling with suicidal ideation. After reaching out to his bank to explain the situation, he started to get help.
“I still find myself gambling occasionally but nowhere near as much as I used to. I spend a lot of time on the internet and doing evil sudokus which helps keep my brain active, and now I can see the light at the end of the tunnel.”
Unfortunately, these crack cocaine machines destroyed countless lives. The only real surprise is that it took the UK Gambling Commission and the government so long to implement changes that British bookmakers vehemently opposed.
The Gambling Industry Was Accused of Targeting Areas in High Deprivation
When FOBTs were first legalized and regulated by the UK Gambling Commission, British bookmakers were limited to four machines in a single store. To circumvent this rule, bookmakers would simply open up new shops, which meant you’d often see multiple bookmakers on a single street. For example, in an 800m stretch of road in East Ham, there were a staggering nine different bookmakers to choose from.
Many saw this as deliberately targeting poorer areas; most crack cocaine machines were positioned in areas that struggled with poverty. It was very rare to see them placed in wealthy neighbourhoods, and many critics claimed that the increase of betting shops (along with the increase in fixed odds terminals) was directly targeting those in poorer areas.
This was one of the key findings when the government and the UK Gambling Commission started to look at the re-regulation of these machines. They found that a new betting shop was opening far too frequently, and these British bookmakers were profiting almost exclusively from these FOBTs.
Players Could Lose Significant Amounts of Money
Do you want to see just how much money players could lose from playing on fixed-odds betting terminals? Or, are you curious about how much money the betting shops made? Here’s what Liam had to say to The Guardian as part of an investigation they ran:
“As a member of staff, we were allowed to ‘advise’ customers that they may wish to stop and offer them GamCare leaflets,” he said. “However, at no time were we allowed to cut them off in the same fashion bar staff might do to a drinker who has had too much.”
Working for a few years as a deputy manager at a major high street betting shop, Liam estimates about 60%-70% of the shop’s profits came from FOBTs: “We would make at least £4,000-5,000 on a Saturday, with around half of that from FOBTs. One bank holiday weekend, we took in excess of £20,000 just from the machines.”
One of the significant issues with fixed-odds betting terminals was the fact that players were able to wager up to £100 every 30 seconds; that’s £200 every minute, £2,000 every ten minutes and a staggering £12,000 per hour. Combine this with the high rate of gambling addiction these machines were shown to cause, and you can see why they were dubbed the crack cocaine of gambling.
However, as it turns out, the betting shops’ greed led to their demise. After many years of campaigns for fairer gambling, new gambling regulation was brought in that severely limited the ability of a betting shop to profit from fixed-odds betting terminals. We’ll be taking a look at these changes in just a moment.
What Previous Legislation Regulated a Fixed Odds Betting Terminal?
Before the new regulations came into force, there was legislation regarding fixed-odds betting terminals. This legislation came from the UK’s Gambling Act, although, according to campaigners, it didn’t contribute to fairer gambling and made these ‘crack cocaine’ machines even more dangerous. Below, we’ll look at the previous rules and regulations the betting industry had to follow.
£100 Maximum Stake
In the past, the maximum amount of money that could be staked in a single game was £100. However, this did not apply to all games on the FOBTs. For example, a player could wager £100 every time they played roulette. However, the single spin of a slot machine was capped at £2.
However, the gambling industry started to find ways around this. For example, with video slots, they found that they could charge players up to £50 for an ‘enhanced’ round; Mega Spins, as they were often called.
It’s precisely these types of cheap tricks that experts claim led to such high levels of gambling addiction, and it’s what eventually prompted the UK Gambling Commission to get directly involved.
£500 Maximum Payout
One of the strangest rules (for players to understand) in betting shops was the fact that the maximum payout allowed on ANY game on the FOBTs was just £500; this meant that if a player was to wager £100, at BEST, they could win five times their money.
The reason behind this maximum cap (which is still in place today) is down to the fact that FOBTs are classified differently from the casino games and video slots you’d find in land-based casinos. They’re simply a different category of machines — it’s the same as how fruit machines in pubs and bars are limited to paying £100.
The FOBTs had to display a message every 20 or 30 minutes to players stating how much money they’d won or lost during that playing session. However, these were pointless as a player simply needed to press “dismiss” to discard the message.
This is one of the many examples of the UK Gambling Commission posturing to make it look as though they’re trying to do something. In reality, it’s something that has virtually zero effect on the gambler and is highly unlikely to help problem gamblers stop playing video slots or Roulette games.
Staff Supposed to Perform “Welfare Checks”
As we saw earlier from an industry insider, staff at high street bookmakers in the UK were SUPPOSED to perform welfare checks; if they saw players in visible distress or they felt that a player was losing too much money, they were supposed to step in. They even had the ability to prevent a player from spending any more money if they felt that they were witnessing problem gambling.
However, as we’ve seen, this was very rarely enforced; as always, the betting shops privatized profits.
30-Second Time Limit
With the exception of video slots, players who were playing Roulette games or other similar casino table games were required to wait 30 seconds between games. However, video slots didn’t carry a time limit beyond 2 seconds — the same time frame that’s now in place in the online gambling world.
The FOBT “Ban”: Explained
So, now, we’ve covered what the FOBT landscape used to look like, why problem gambling was so rife, and why the UK Gambling Commission decided to get involved finally. But, what happened, and what is the so-called “FOBT ban” we keep talking about? After years of campaigning from problem gambling charities, critics, and MPs, the UK Gambling Commission, in conjunction with the government, started to launch reviews into the harm of FOBTs and what should be done. The bombshell came when the UK government published the following on their website:
“The maximum stakes on Fixed Odds Betting Terminals (FOBTs) will be reduced, Gambling Minister Tracey Crouch announced today as the government published its gambling review.
The government has launched a consultation on options for cutting maximum stakes of B2 gaming machines, otherwise known as FOBTs, from £100 to between £50 and £2. We have also asked the Gambling Commission for more information about how better tracking and monitoring of play on FOBTs can help with interventions to protect players and whether spin speed on games such as roulette should be looked at.
This reduces the potential for significant losses on the machines and the risk of harm to both the player and wider communities in which these machines are located, such as the increased health costs associated with problem gambling.
In addition to the launch of a 12-week consultation on FOBTs, there will be a package of measures taking effect to strengthen protections around online gambling and gambling advertising to further minimize the risk to vulnerable people and children.”
The Gambling Minister of the UK, Tracey Crouch, said:
“It is vital that we strike the right balance between socially responsible growth and protecting the most vulnerable, including children, from gambling-related harm.
Given the strong evidence and public concerns about the risks of high stakes gaming machines on the high street, we are convinced of the need for action. That is why today, we have set out a package of proposals to ensure all consumers and wider communities are protected.
We have seen online gambling grow rapidly, and we need to protect players in this space while also making sure those experiencing harm relating to gambling receive the help they need.”
Essentially, players were now only able to stake a maximum of £2 per game; this wouldn’t change the video slots at all (aside from the removal of the Big Bet games). But when it came to Roulette games, well, the situation changed dramatically.
Naturally, there was a LOT of resistance from operators, as you’ll see below.
Staunch Resistance From Operators
There was a HUGE opposition to the ban from the gambling industry. More than 50 independent bookmakers wrote to the Prime Minister, Theresa May, pleading with her not to “throw them on the scrap heap” by reducing the maximum bet to £2.
In their letter, they wrote: “At a £2 stake, many of our family enterprises will close, our staff — including members of our own families — will lose their jobs, and all the monies to government, local councils, and racing will be lost. The consequences for our businesses would quite simply be disastrous.”
“Customers will not play FOBT games at this staking level as they are unable to spread their bets and de-risk their play. These are gaming customers who will not switch to betting on horses or football but will simply go online or to other venues, and we will not be able to compete or trade as viable businesses.”
Small bookies like ours are already facing huge pressures, and a £2 stake would be too much to take. Many would simply not be able to carry on trading and would be forced to shut up shop forever.
“The prime minister says small firms like ours are the backbone of Britain — she has the chance to prove it by making sure a disastrous £2 maximum stake never sees the light of day.”
While it may be true that the smaller bookmakers were affected most, it was the biggest brands in the UK — Paddy Power, William Hill, and Coral — that were even more opposed to the ruling.
For example, the Financial Times reported:
“Bookmakers with large numbers of retail outlets currently count on FOBTs for a large proportion of their profits, and shares in Ladbrokes and GVC — which is in the process of buying it — tumbled on Monday morning did rival William Hill.
In a statement released to the market after the drop, Ladbrokes Coral chief executive Jim Mullen stressed that “the current call for evidence is yet to conclude, and industry responses have not yet been submitted to the government.” However, he added that if the government does implement a £2 limit, the cut “will have serious consequences . . . which will ultimately affect jobs, tax revenue and the funding of racing”.
A report by accountancy group KPMG on behalf of the Association of British Bookmakers estimated that cutting the maximum stake to £2 would put more than 3,000 shops at “additional risk of closure” by 2020, which would cause over 15,000 job losses.”
However, a LOT of this language was nothing more than scaremongering; of course, the major gambling giants wanted to protect their very lucrative source of income. They (unsuccessfully) lobbied for years to prevent the changes from taking place.
Nonetheless, they did happen, and it had an immediate impact on the betting shop industry in the UK.
What’s Happened Since?
Since the ban was brought in, the gambling industry on the high street has changed — a lot.
One of the most immediate effects was the closure of bookmakers throughout the UK; a new report released shortly after the FOBT ban revealed that more than 1,000 betting shops up and down the UK had shut down since the regulations were first brought in. On average, this equated to four betting shops shutting down each and every day.
As time goes on, more bookies are set to close down, and, according to some estimates, the next three years could see a total of 2,000 shutdowns. If these figures were to be correct, it would mean that just over 6,000 betting shops would remain in the UK.
An unfortunate consequence of this is that some 11,000 people are set to be out of work due to the FOBT ban. Rather staggeringly, this equates to around 10% of the total workforce of the UK’s gambling sector, and this was one of the main focal points for lobbyists when they were doing all they could to prevent the ban from coming into force.
Betfred’s founder, Fred Done, discussed the situation, stating:
“We are fighting for our lives. When Mothercare closed, there was sympathy for the people who lost their jobs. But I haven’t heard a single politician show sympathy for anyone out of work in the betting industry. We don’t matter to the Government.”
Severe Drop In Profits for Operators
In a staggering report, The Guardian reported, just a few months after the FOBT ban came into force, that William Hill had posted losses of £63.5 million. It was expected, BEFORE the ban, to make a PROFIT of £51 million – and this was soon as a significant blow to the bookmaking industry in the UK. As a result, William Hill announced that they would be shutting 900 of their UK stores, putting around 4,000 jobs at risk.
However, it’s worth noting that most of the biggest bookies in the UK had anticipated the changes coming in for a long time. Because of this, they had already started to turn their attention to online gambling, particularly in markets like the USA, where things were just beginning to open up legally.
Fewer Users Than Ever Before
One of the most anticipated consequences of reducing stakes in the fixed-odds betting terminals was that so few players would play the machines than in the past. While slot machine play was not affected so much, roulette and other casino table games were massively impacted, and in fairness, it is not hard to see why.
Previously, players were able to wager as much as £100 per spin (every 30 seconds). While the maximum win was capped at £500, this was still a relatively decent amount of money to win at a local UK high street bookmaker.
However, once the maximum stake was reduced to 2 pounds, players could only wager a total of 2 pounds in games like roulette, which meant that the maximum possible payout from a single spin was £72. While that is still a reasonably lovely win to have, the fact that players have so little control and freedom when it comes to placing their bets means that most of them have simply turned to online gambling. Or, they head to land-based casinos where these betting limits are not in place.
As a result, the number of players playing on fixed-odds betting terminals has decreased drastically, which is one reason why the gambling industry was so vocal against the changes being brought in.
High street bookmakers can’t compete with online gambling websites today. Not only do online websites generally offer better return to player percentages, but they also offer a much more extensive selection of games, better bonuses, and promotions. There is no £500 win limit which means that players can win — potentially — tens of thousands of pounds from a single as opposed to the £500 which can be won in the high street bookmakers.
However, some of the gambling operators, mainly the software providers who make the games, have started to develop innovative ways to get around the maximum 2-pound stake rule. We will be taking a look at some of these mechanisms in the following subsection of this post.
Operators Attempt to Circumvent Rule Changes
When the game developers realized that players didn’t have an interest in wagering 2 pounds per spin on roulette, they started to come up with quite creative ways to get around the new rules and regulations. For example, one way they achieved it is that they allow players to play a 2-pound side game, and only if the player wins this side game are they then able to enter the main roulette board. When they get to the roulette board, they are given a number of chips; these do not have a specific monetary value attached but instead are worth the amount of risk that the player took when gambling the 2 pounds initially.
We have seen similar approaches in video slots. For example, some game developers now allow players to spend 2 pounds to spin the wheel, and on that wheel, there is a small segment that results in a win. If the player is lucky enough to land the wheel in this winning segment, they will enter a bonus round where the slot spins are worth more than 2 pounds per spin.
However, the UK Gambling Commission and responsible gambling charities throughout the UK have started to notice a pattern, and they are not naïve to the fact that gambling operators and bookmakers are doing everything they can to get around the new regulations.
A recent report from the UK Gambling Commission warned gambling companies against doing what they’re currently doing. We are likely going to be seeing even more regulations coming in in the future to combat these clever tactics to get around the reduction in the maximum stake.
However, critics argue that this will once again simply push players to start gambling online; one of the biggest problems with online gambling is that it is possible to spin away hundreds of pounds every few seconds. Hence, it can be even more harmful than the gambling that takes place in high street bookmakers in the UK.
What Happens Next?
Unfortunately, the gambling industry in the UK simply did not take notice of responsible gambling critics and the UK government in the years that preceded the ban on £100 stakes on fixed-odds betting terminals. Had the high street bookmakers and game developers been less greedy, there is a strong chance that the measures would never have come in, and players would still be able to play the games in a similar way that they did before.
However, the government had no choice but to intervene due to their greed, and high street bookmakers are now paying the price. It seems unlikely that these rules will ever be reversed, and with most punters choosing to place their sports bets online today, it seems as though high street bookmakers live on borrowed time.
Online gambling and online sports betting are far superior to the experience a player can get in a high street bookmaker today. Aside from the social aspect of heading to a local bookmaker, there remains virtually no reason for a player to go to one anymore.
This is sad, but ultimately, the responsibility comes down to the bookmakers who decided to change the profit model when fixed odds betting terminals started appearing. Many say that they dug their own grave in this respect, and it looks as though there is no coming back from this.
However, most of the more prominent high street bookmakers in the UK have started to turn their attention toward online gambling successfully. Many companies, such as William Hill, have started to expand into other parts of the world, like the United States. As these other online gambling markets open up, British bookmakers may find themselves having one last chance to save their business — but only time will tell whether they learned their lessons from the past or not.
It should come as no surprise to learn that the land-based casino industry in the US is big business. This multi-billion-dollar industry attracts millions of players every year – from around the world – and the casino business, if successfully cracked, is one of the most lucrative for business owners.