UK: FOBT war of words continues between ABB and campaigners

UK chancellor George Osborne used his recent 2014 Budget to unveil plans to increase the tax rate on FOBTs from 20% to 25%. The government also wants to make voluntary warnings introduced under a code of conduct by the ABB to become tougher and mandatory.

The new code allows gamblers to set limits on the amount of time and money they spend on FOBTS, with mandatory alerts then appearing on screen to warn players when they have spent £250 or have played for more than 30 minutes.

Despite introducing the new code, the ABB has been critical of the new tax rate and has expressed its concerns about the potential reduction of FOBT maximum stake from £100 to £2. The topic has become a prominent gambling issue in the UK, with newspapers such as the Guardian and Daily Mail covering it extensively.

The ABB told iGaming Business that the negative effect on betting outlet jobs caused by the new regulations would be compounded by the planned increase in the tax rate.

ABB spokesperson Peter Craske said: “We set out a detailed submission to the Government a year ago detailing what would happen to shops and jobs if the B2 gaming machine stakes were reduced to £2, and if anything, the situation is worse than then, with the increases in taxation the industry faces.”

In its detailed submission a year ago, the ABB said up to 7,800 betting shops and 39,000 jobs could be at risk if the FOBT maximum stake were to be decreased.

In addition, Neil Goulden, chairman of the ABB, recently wrote to Prime Minister David Cameron to make him aware of the potential effects such measures could have on the UK gambling industry.

“Our industry has been subjected to unprecedented additional financial burdens which are simply unsustainable,” Goulden said in the letter. “The total burden of these taxes is £350 million (€424.9 million/$584.9 million), which represents more than 40% of our underlying profit.

“These taxes comprise consecutive machine games tax increases, a planned new online gambling tax, additional levy and the financial impact of the recently and voluntarily introduced ABB code.

“It is therefore no surprise that many of the 40,000 staff in our industry are going to bed worrying about the future of their jobs. These are legitimate worries in the current climate.”

However, the independent report by NERA said the impact of introducing of a lower stake could be as low as 700 shop closures and could in turn boost business levels across other shops, with a potential net increase of 2,400 jobs.

NERA also said the increased tax rate on FOBTs would produce a “small” impact with the socio-economic cost of FOBT problem gambling to the government likely to be reduced.

Derek Webb, founder of the Campaign for Fairer Gambling, added: “This NERA report shows how self-serving the ABB report is. There is some risk to industry corporate profits, senior staff bonuses and share prices, but the risk to individual shops and staff has been dramatically over-stated.

“There has been complacency in government whereby there has been an assumption that the economic consequences of FOBTs are understood, and this is then used as an excuse not to take action on FOBT stakes.

“However, if government has been relying on the ABB report, they have been relying on misleading representations rather than evidence.

Peter Craske, responded for the ABB that “98% of all responses to that consultation backed no changes to stakes and prizes in betting shops and the Government decided to make no changes.

“It is hardly a surprise that anti-betting shop campaigners are now rowing back and trying to claim their demands would see fewer jobs lost than would actually be lost, but the 1,200 shop closures they believe will happen would still mean 7,200 real people losing real jobs.

“In the last 18 months alone, 400 shops have closed, and a further 600 are now at risk following the increase announced in Machine Games Duty in the Budget.”