FOBT delay costs Treasury money, says latest research

The Government is set to lose money by delaying implementation of a £2 stake on Fixed-odds betting terminals (FOBTs), new research suggests.


Analysis from Cebr shows that a two-year delay in implementation of the new stake limit, announced in May, not only has a social cost, but could see the Exchequer miss out on an annual revenue boost of up to £264m (£132m per annum).

At the same time, bookmakers will be profiting by between £348m and £540m a year as they maintain revenues from high-stakes FOBTs. That could mean additional income of £1.1bn over a two-year implementation period for bookmakers and games manufacturers who profit from the machines.The research was commissioned by trade association Bacta and the Local Government Association.

Under Cebr’s modelling, the £2 stake limit could deliver government a net gain in tax revenue to the Treasury of between £98m and £132m per year,if it makes an expected adjustment in Remote Gaming Duty (RGD) to 20 percent at the same time.

According to the model, while there will be an estimated reduction of £287m in Machine Games Duty (MGD) revenue as a result of the £2 stake,this can be compensated for by a combination of increased RGD, and tax and wider economic benefits from displaced FOBT revenues that flow into alternative gambling channels and the economy as a whole.

On a conservative estimate, displaced FOBT revenues would deliver £394m in additional tax revenue, comprising £33m from increased over-the-counter (OTC) betting,£29m from additional revenue on B3 machines and £22m from casinos.An increase in RGD from 15 to 20 percent would yield a projected £309m.

Cebr also estimates that the £2 stake will deliver over £100m in annual GVA contributions to GDP, as FOBT revenues flow into alternative sectors of the economy.This could,in turn, delay the realisation of a potential net boost in employment of about 2,800 jobs. Rather than reducing employment the stake reduction could lead to job creation.

The delay in implementing the lower stake limit will also carry a social cost, the report argues. There could be a £47m annual reduction in fiscal costs associated with problem gambling,and a £255m fall in related social costs,should the £2 stake deliver a 25 percent reduction in the number of problem gamblers. The value of such losses to society could be even greater once the distributional aspects of the policy are considered. As FOBTs tend to be concentrated in relatively deprived areas these areas will be hardest hit by a delayed stake reduction.

John White, CEO of Bacta, responded to the analysis: “This research completely overturns the assumption that the government is going to lose tax revenue as a result of cutting the stake on FOBTs. In fact, through a sensible adjustment to taxation on online gambling, and the benefit of revenues that will flow into other sectors of the economy,the Exchequer is going to see a net gain.

“Further delay to the implementation of the £2 stake directly benefits book- makers at the expense of the vulnerable. It is costing the government vital revenue while keeping people in harm’s way.

“The cost of delay has never been clearer,and we urge government to implement the stake reduction as soon as possible and no later than April 2019.”

Cllr Simon Blackburn, Chair of the Local Government Association’s Safer and Stronger Communities Board, was keen to stress the broader impact: “It’s clear from this research that bookmakers will continue to profit from vulnerable people and gambling addiction while the government delays implementation of the £2 stake limit on FOBTs.

“It’s unacceptable that bookmakers could be in line for more than £1bn in additional revenues should the £2 stake be delayed until 2020.This is especially true given we know bookmakers are clustered in deprived areas,and therefore making these extreme profits from people who can least afford to lose large amounts.

“The government made the right decision to impose a £2 stake limit, but by delaying its implementation it is only compounding the social and economic problems we know FOBTs cause.”


This article was originally published on

Related Posts