SOMETHING happened this week which will have huge ramifications for betting operators in the UK, but might set off a chain of events which will affect all those who bet on horse racing in these Isles.
An all-party parliamentary committee has recommended that the maximum stake on FOBTs (fixed odds betting terminals) be reduced from £100 to just £2, to the fury of the Association of British Bookmakers.
FOBTs became part of the furniture of Britain’s betting shops in 2001, although the original intention of hawking high-margin virtual racing and keno-style games was soon brushed aside when it became clear what the real money spinner was.
Roulette, as far as machine players were concerned, was the only game in town, and while there were initial misgivings from the likes of Ladbrokes about the viability of promoting a product with a margin of only around 3%, the proof was quickly evident.
Machines loaded with non-roulette games operated at a margin of 20%, but barely took a penny, whereas the roulette machines usually had a queue of people to play and in some places, there were more punters were watching other men play roulette than there were watching the unfolding horse and greyhound racing on the main screens of the shop.
All at once, the landscape changed, and those who needed a quick fix were glued to the machines, with a corresponding fall in over-the-counter business on racing. Bottom line profits from FOBTs were soon more reliable and more lucrative than from a volatile sporting menu, and with less mug money thrown at horse racing products, firms saw that margin eroded.
The advent of betting exchanges also allowed clued-up punters to navigate betting markets more efficiently, meaning any ricks made by odds-compilers were soon exposed. The firms effectively put the shutters up against punters who gave any indication of being selective, with once generous liabilities slashed, and all the while efforts were made to maximise the profitability of the betting terminals.
After 15 or more years, we have a chronically risk-averse industry cravenly hanging on the the lifeline offered by machines which were accused by gambling charities and help groups of being dangerously addictive.
COMPLAINTS
For years nothing happened, and complaints that restrictions placed on ordinary horse racing punters were too heavy handed fell on deaf ears, as did the complaints about the danger posed by high-volume gambling enabled by FOBTs.
Bookmakers have always been very good at political campaigning, and there has always been an unhealthy self-interest in the chambers of power which has seen a meaningful review of the industry mired in sleaze and filibuster. All of a sudden, however, things have changed, and while the ABB refused to cooperate with the parliamentary committee on FOBTs, the leader of that committee didn’t mince her words when she said:
”The time for prevaricating is over. These machines are easily accessed in the most deprived areas, sucking money out of the pockets of families. I support a responsible gambling industry, but there is nothing responsible about how FOBTs are currently being operated. I urge the Government to take action now.”
ABB chief executive Malcolm George might have thought that this report might have been expected to go the way of previous attempts to declaw the industry given his refusal to present a case while the paper was compiled. But he came out all guns blazing with accusations that the recommendation are fueled by a vested interest and are spurred on by casinos, as well as the arcade and pub industries whose own AWP (amusements with prizes) machines have much lower limits and are therefore generating reduced profits for their hosts.
That may be true in part, but the bookmaking industry crying “vested interest” sounds far too much like “wolf” for comfort.
Well, the initial prognosis might be bleak, but continued spending on machines is a false economy if the bread and butter of the industry is left to go stale.
The current system of account closures and restrictions doesn’t just hit the professional punter, but anyone who looks like they might not be ruled solely by impulse are getting brutally factored without even backing a winner.
Sometimes one bet is enough, it seems, to deem a new punter persona non grata. It need not be like this, and there are much more sophisticated ways of managing liability than the current sledgehammer-to-crack-a-nut methodology, as an excellent recent blog by former Paddy Power trader Brendan Duke points out (Google it!).
Cutting out the special offers and laying a fair bet to all needn’t be a disaster for bookmakers, and has a very real chance of generating much-increased turnover, increasing vibrancy and halting the drain of revenue lost to other sports.