Almost a month ago, on April 1st, an enormous change was brought to the retail gambling sector in the UK, after the Government finally rolled out the long-awaited crackdown on the notorious fixed-odds betting terminals (FOBTs).
The beginning of April saw the reduction of the maximum stake of the controversial machines from £100 to £2 after a lengthy consideration process and thorough reviews of the industry. The machines have been blamed for fuelling gambling addiction in the country, by offering extremely high betting stakes and quick gameplay to UK gamblers. Both of these factors, combined with the flashing lights and the distinctive sounds of the terminals have been considered responsible for attracting the players’ attention for longer.
As expected, UK gambling operators have not reacted well to the news of the upcoming crackdown once the Government’s decision for imposing stricter measures on the sector was revealed. Some of the largest bookmakers in the country warned that the FOBT crackdown would have a devastating impact on their businesses, as most of them have been dependent on the stable revenue generated by the fixed-odds betting terminals.
As explained by operators, the lower maximum stake available at the machines would force them to initiate lay-offs and close some of their brick-and-mortar betting shops across the country. At the end of March 2019, the British gambling giant William Hill turned to its landlords asking them to cut the operator’s rents value by 50% to help it offset the detrimental impact which the FOBT crackdown was expected to have on its performance.
However, saving on rents does not seem like a strategy which would be effective for any gambling operator in the long term. This is why some experts believe that some operators would bet on other strategies for dealing with the stiff FOBT revenue in the months to the end of 2019 and the years after.
Two Gambling Operators Try to Bypass New FOBT Rules by Launching High-Stake Roulette-Style Games
Could local gambling operators compensate for the major decline in their revenue generated by controversial FOBTs by adding another product to their retail offering which would bring them as much as the machines would do? The answer is probably yes, especially in case the companies do not try to outsmart the authorities by circumventing the UK Government’s crackdown on the FOBTs.
In fact, some of them already tried that. Two of the largest gambling companies in the country, Paddy Power Betfair and Betfred, released new roulette-style games on the very same day when the new FOBTs’ maximum betting limits were brought into effect, in an attempt to bypass the stricter rules imposed by the authorities.
As Casino Guardian reported at the time, April 1st saw the introduction of reduced maximum stakes on the machines, but this was not all. Paddy Power Betfair rolled out a roulette-style game called “Pick ‘n’ 36” offering a maximum stake of £100, equalling the previous maximum stake available at FOBTs. At the time when the game was released, an employee of the gambling operator revealed that the game had been launched on trial only in a number of the 320 betting outlets of the company.
The other gambling firm which tried to circumvent the new betting machines’ rules by introducing a new roulette-style game was Betfred. On April 1st, the company started offering “Virtual Cycling”, which offered a maximum stake of £500 – an amount much higher than the maximum FOBT stake even at the time when it equalled £100. As Casino Guardian revealed at the time, a spokesman of the gambling giant described the new addition to the company’s offering as a game offering over-the-counter bets, rather than a machine game.
At the time, there was also a third operator which was testing a roulette-style game, called “Wonderball”. This was William Hill, which has previously warned that its performance would be seriously affected by the FOBT maximum stake reduction. Reportedly, the game would have offered a maximum stake of £50 and prizes of up to £25,000.
An investigation was given a start right away. On the very next day, the UK Gambling Commission revealed that both of them have withdrawn the new games after the regulator issued a warning. The watchdog, however, also explained that the companies could still face regulatory action, and there was also possibility for key senior staff members of the bookmakers to be investigated by the Commission.
Online Gambling and US Market Expansion
On the other hand, the online gambling sector has been highly profitable over the last few years, as many players have preferred to place their bets in the comfort of their home or simply not to be engaged with going into a brick-and-mortar betting shop every time they would like to spend some money on making bets.
As revealed by the UK Gambling Commission (UKGC), online gambling, and especially mobile gambling has been increasing in popularity over the last few years, with mobile phones remaining second in popularity among British gamblers in 2018. That is the reason why the rapid pace of growth in the online gambling operations has been considered a driver for further growth of the local gambling companies and help them compensate for the losses in the retail sector.
On the other hand, the stricter regulation in their domestic market has pushed some UK gambling operators to seek further expansion in overseas markets in order to offset the negative impact which the crackdown imposed by the Government on fixed-odds betting machines is expected to have on their performance.
Apart from that, the US Supreme Court’s decision to make sports betting legal in the country last year has made the US a desired destination for further expansion for many of the British gambling companies. According to experts, the recently-opened sports betting sector would probably be quite profitable, so the desire of many of the large players at the UK gambling sector to get as much presence as they can is understandable, not to mention that a number of operators have seen their US expansion as a way to beat falling FOBT revenue in the UK.