Bengaluru: Britain will cut the maximum stake on fixed-odds betting terminals to just two pounds after the government opted to try to tackle problem gambling and rejected claims that it could cost thousands of jobs.
The decision follows complaints that the machines, which enable people to bet up to 100 pounds ($135) every 20 seconds on electronic games such as roulette, were highly addictive and had led to gamblers building up big losses.
“These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all,” Matt Hancock, Secretary of State for Sport, said in a statement on Thursday.
The decision deals a blow to bookmakers however, who had argued that the fixed-odds betting terminals were a major source of income for high-street betting shops which are struggling to stay afloat as younger gamblers move online, putting jobs at risk.
The reduction will also be linked to an increase in Remote Gaming Duty, a tax paid by online gaming operators, in a bid to protect the amount of income government gets from the industry.
London-listed gambling stocks, which were hit by the government’s moves, have had a topsy-turvy week, surging on Monday after the Supreme Court paved the way to legalize sports betting in the United States.
With tighter curbs and higher taxes in their home market, the companies are likely to seek to expand across the Atlantic. Ireland’s Paddy Power Betfair said already on Wednesday it was considering merging its U.S. business with fantasy sports company FanDuel.
According to the latest Gambling Commission data, there are over 182,000 gaming machines in Britain with Ladbrokes Coral-parent GVC, William Hill and Paddy Power Betfair generating a large chunk of their retail revenue from them.
There are over 8,788 betting shops in Britain and companies are allowed to install a maximum of four machines per shop.
Ladbrokes Coral, bought by GVC for close to 4 billion pounds late last year, operates close to 3,500 high street betting shops across the UK, employing over 25,000 people. William Hill has around 2,300 betting shops employing over 12,500 people.
William Hill said the new regulation could lead to a 35 to 45 percent reduction in annual total gaming net revenue. It said that the limit could result in around 900 of its high streets shops becoming loss-making.
GVC, which bought into retail exposure with its Ladbrokes deal late last year, said cutting the top stake on gambling machines would mean a reduction of around 160 million pounds ($216.5 million) in its core earnings in the first full year.
However, GVC said it did not intend to seek a judicial review of the decision.
The British government has not set an exact timetable for implementing the changes, Hancock, the minister responsible for the sector, said.
Shares in all three companies fell in early trading on Thursday, with William Hill, down nearly 3 percent at one stage, hit hardest.
The government’s action, which marks the biggest regulatory change in the UK gambling industry since rules were liberalized in 2005, was welcomed by charities, the church and opposition politicians.
The opposition Labour Party’s deputy leader Tom Watson said on his Facebook page: “This announcement signals the end of the reign of destruction and misery that FOBTs have brought on the lives of gambling addicts and their families and communities for too many years.”
The government, which said the change would need parliamentary approval, pledged to engage with the gambling industry to ensure it was given sufficient time to implement and complete the technological changes.
Chief Executive of Sky Betting & Gaming, Richard Flint, hit back at the government’s plans to increase remote gaming duty to make up for a loss of revenue caused by cutting FOBTs stakes.
“Increasing an already heavy tax burden will clearly have an impact on our plans to create new jobs in the North of England in the years to come”, Flint said.
The proposed increase in the duty hit shares of online-led gambling companies such as 888 Holdings and Sportech dropping over 4 percent in early trading.
The government said the Gambling Commission would also toughen up protections around online gambling such as stronger age verification rules and proposals that require operators to set limits on gamblers’ spending until affordability checks have been conducted.
It also laid out plans for a major multi-million pound advertising campaign promoting responsible gambling that will be supported by the industry.