Highly Demonized Fixed-Odds Betting Terminals Generate £11.7 Billion in 2008-2016

The UK is a nation with rich betting traditions and this is why the rapid and constant growth of its gambling industry has barely surprised anyone. The expanding industry necessitated an expanded scope of regulations. That need culminated in the introduction of the Gambling Act 2005, which became the UK’s gambling law and which, among other things, created the UK Gambling Commission.

For more than a decade now the UKGC has regulated the local industry, adopting policies aiming to ensure the safe and secure provision of gambling services of different nature. The regulatory body has also been responsible for the preparation of detailed reports on the development of the industry throughout the years.

Fixed-odds betting terminals have always been a particularly popular gambling product in the UK, both in the years prior and after the industry’s re-regulation in 2005. The machines were introduced to betting shops around the nation in the early 2000s and quickly ignited big interest among customers. On the other hand, the devices also became quickly the subject of bitter controversies over the years and have been attacked by gambling opponents for their “addictive nature.”

Under UK gambling laws, the B2 gaming machines, as they are designated, allow customers to bet up to £100 every 20 seconds. The controversial devices have appeared on politicians’ radar screens, particularly over the past several years. Last year, the government announced that its traditional triennial review of the gambling industry would be focused on the FOBTs vertical and the potential introduction of certain curbs.

MPs have called for a massive reduction of the maximum stake allowed to just £2. However, the government is burdened with the responsible task to find a balance between what would be a responsible provision of this type of gambling service and what would be reasonable restriction of the threats FOBTs pose to vulnerable gambling customers without this killing the industry’s profitability.

The gaming devices may have been highly demonized by opponents, but they have been blessed by gambling operators with retail operations across the UK. FOBTs have over the years turned into the highest grossing gambling service offered at betting shops around the nation.

According to figures published by the UKGC, the amount of £11.7 billion was generated in gross gambling yield by the machines in the period between April 2008 and March 2016. And as seen in the table below, this segment of the UK gambling industry has seen a continued and stable growth during the reviewed eight years.

UK Fixed-Odds Betting Terminals Data (2008-2016)
Apr 2008-Mar 2009 Apr 2009-Mar 2010 Apr 2010-Mar 2011 Apr 2011-Mar 2012 Apr 2012-Mar 2013 Apr 2013-Mar 2014 Apr 2014-Mar 2015 Apr 2015-Mar 2016 Oct 2015-Sep 2016
GGY (£ Billion) 1.05 1.17 1.3 1.46 1.5 1.58 1.69 1.76 1.8
Number of FOBTs 31,484 33,706 32,862 33,350 33,467 34,549 34,960 34,578 34,388

FOBTs have been the most profitable betting machine category in the UK, with GGY never falling under £1 billion since 2008 when first official figures were released by the UKGC. As seen in the above table, GGY from the devices totaled £1.8 billion during the period between October 2015-September 2016. GGY from all available types of gaming machines in the UK amounted to £2.7 billion during those same twelve months. In other words, FOBTs accounted for over a half of UK’s gaming machine market. It is also important to note that the trend has been maintained since 2008.

*Gaming machines GGY chart by UK Gambling Commission

FOBTs have also increased in number over the years. There was an average of 33,705 machines at betting shops around the UK in the period between April 2008 and September 2016. The devices peaked in number in the April 2014-March 2015 reporting period, when there were 34,549 of them.

The results of the government’s report on FOBTs and any ensuing measures will become known to the public in October 2017, as recently revealed by Parliamentary Under Secretary of State for Sport, Tourism, and Heritage Tracey Crouch.

Limitations on the controversial machines will almost certainly be imposed. However, the extent of the pending crackdown is yet to be seen. There are several things that need to be taken into account here. Tougher restrictions will most certainly affect the profitability of bookmakers with UK retail businesses. What is more, the crackdown may eventually see further changes in the nation’s gambling landscape.

Three pairs of large gambling operators merged their operations after the introduction of the Point of Consumption tax in late 2014. Many believe that heavier restrictions on FOBTs may unleash a new wave of merger and acquisition deals in the industry.

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