The government could face a high court showdown with bookmakers over fixed-odds betting terminals (FOBTs), amid industry dismay at suggestions that ministers have decided to cut maximum bets on the machines to £2.
The stock market value of some of the UK’s biggest bookmakers slumped by more than £660m on Monday, following reports that new digital, culture, media and sport (DCMS) secretary, Matt Hancock, favours tough curbs on the lucrative but controversial machines.
What are FOBTs?
Fixed-odds betting terminals (FOBTs) are machines, found largely in bookmakers and betting shops, that allow customers to stake up to £100 every 20 seconds on digital versions of games such as roulette.
Why are they considered a problem?
Critics of FOBTs say they are particularly addictive, allow gamblers to rack up huge losses within a few hours, and are concentrated in deprived areas. They have also been linked to money laundering.
Will the review improve matters?
It depends on the outcome of a 12-week consultation. If maximum stakes are cut to £2, bookmakers say shops will close en masse and problem gamblers will get their fix elsewhere. If stakes are cut to £50, it will be business as usual for bookmakers, with campaigners warning that gamblers will continue to make huge losses. Something in between seems the most politically palatable option for the government.
Bookmakers have previously ruled out launching a judicial review of the department’s decision, regardless of the outcome, due to the difficulty in proving the process was flawed.
However, industry figures believe the government may have unwittingly opened the door to a legal challenge by appearing to take a decision before Tuesday, when a 12-week evidence-gathering period is due to end.
One senior figure at a major bookmaker said: “If it looks like they’ve ignored a lot of evidence and made up their mind there’s a risk [of a judicial review] from someone in the industry.
“If it’s a disaster-case scenario, there must be someone who’ll say we’ve got nothing to lose.”
A source at another high-street bookmaker said: “It [a judicial review] is always a last resort but a departmental briefing has to be a major concern just days before the consultation closes.”
A departmental head at a third bookmaker said his firm could not afford to fund a legal challenge, but added: “Whether in the larger scale of things we’re approached to join an industry group is a different matter.”
Bookies gained more than half of their revenues from FOBTs last year, pulling in £1.8bn from machines that allow gamblers to stake £100 every 20 seconds on digital casino games such as roulette.
Campaigners against FOBTs claim they are particularly addictive, clustered in deprived areas, and allow gamblers to rack up huge losses.
But in a statement to the stock market, Ladbrokes said a cut to £2 would “fail to adequately address any issue of problem gambling” and have “serious consequences” for the survival of high-street bookmakers and the horse-racing industry, which is part-funded by a levy on bookies’ profits.
The bookmaker is in the midst of a takeover by the online gaming specialist GVC, with the value of the deal directly linked to the outcome of the review.
An 8% fall in Ladbrokes’ share price on Monday took its stock market value down £281m to just above £3.1bn, indicating investors now think a cut to £2 is more likely than it was. GVC’s stock also declined, falling 4%.
William Hill fell nearly 12%, cutting its stock market value by £347m.
The DCMS insisted no decision on stakes had yet been taken.
The Labour leader, Jeremy Corbyn, tweeted:
I hope the Government's review into gambling will result in action to tackle highly addictive Fixed Odds Betting Terminals. Labour is committed to reducing the maximum stake from £100 to £2 a spin. The consultation closes tomorrow, please take part https://t.co/mb3p99aNxu
— Jeremy Corbyn (@jeremycorbyn) January 22, 2018
•This article was amended on 22 January 2018 to correct the headline. The total value of major bookmakers had at one point slumped by £800m, not solely at Ladbrokes.
