What Is a FOBT?
The abbreviation FOBT stands for Fixed Odds Betting Terminal. The FOBTs are electronic machines, located in betting shops, which offer a variety of games, including roulette. Each machine accepts pre-set minimum and maximum betting amount. The minimum betting amount might be as low as £1 while the current maximum bet is fixed at £100. The biggest prize that could be won is £500. According to the Gambling Act 2005, each gambling venture can host up to four betting machines. There are currently more than 30,000 betting machines available in the UK and their popularity is constantly growing. Back in 2013, the United Kingdom Gambling Commission expressed its concerns regarding the possible gambling-related harm that could be experienced by players. According to the UKGC’s theory, machine gambling could be associated with certain risks for some players. People could not only develop a gambling addiction but also experience serious financial losses. According to the statements, the machines supported high-rolling gambling, which is believed to be harmful to the players. The Government, however, had not decided to take any actions until recently when it officially introduced that the machines’ maximum bet amount would be reduced significantly.
The Government Is Reducing the Maximum Bet on FOBT
A while ago, the UK Government has officially announced its plans to reduce the maximum bet on fixed odds betting terminals. Chancellor Philip Hammond has recently said that as a part of the 2019 budget, the maximum stakes would be cut from £100 to £2. It was originally expected that the changes would take place in October 2019. However, following pressure from Conservative party members and the resignation of Tracey Crouch as a Minister of Sport and Civil Society as a sign of protest, the Prime Minister Theresa May has decided to bring forward the FOBT changes. As a result, the FOBT maximum betting amount will now be reduced to £2 in April 2019. The decision was announced in an official statement written by the culture secretary Jeremy Wright:
“The Government is today announcing that the implementation of changes to reduce the stakes of B2 Gaming Machines from £100 to £2 will take place in April 2019. This will be done through a Statutory Instrument, laid before the House this week. Following the consultation on Gaming Machines and Social Responsibility measures, the Government decided to cut the maximum stake for Fixed Odds Betting Terminals to £2 to help stop extreme losses by those who can least afford it and protect the most vulnerable in our society.”
Inevitably, the changes are not welcomed by the British bookmakers as according to recent statistics the FOBT have generated more than £1.8 billion of profits. William Hill and its peer high-street bookmakers are expected to register significant losses in the upcoming year. The only operator that will find benefit from the FOBT changes is GVC Holdings.
The New FOBT Deadline – Profitable to GVC Holdings
While most UK operators will suffer from the upcoming changes, GVC Holdings will initially find them financially beneficial. In March 2018 the company acquired Ladbrokes Coral Group PLC for the price of £3.2 to £4 billion. However, according to the agreement between the two companies, GVC Holdings will benefit from the FOBT changes. As a result, Ladbrokes Coral shareholders will not receive the expected £670 million, as according to the initial deal, they were only going to be paid if the FOBT changes were not implemented by March 28, 2019. With the new April deadline, however, GVC Holdings will now only have to pay £80 million. Thus, the changes are clearly profitable to GVC, especially after the holding announced that the shares in the company were up by almost 8% in November.
