The U.K. drastically reduced the size of bets allowed on roulette and poker machines, crimping a profitable business for the gambling industry that’s been blamed for addiction and contributing to economic hardship.
The maximum bet on fixed-odds betting terminals now will be 2 pounds ($2.71), down from 100 pounds, the government said in a statement Thursday. The Gambling Commission also will tighten rules on online gaming, adding stronger age verification and proposing that operators set limits on consumers’ spending until affordability checks have been conducted, the government said as it finished a review of gambling.
“We have chosen to take a stand,” Culture Secretary Matt Hancock said. “These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all.”
The decision is likely to encourage bookmakers to seek new sources of revenue, a trend that’s already under way with Paddy Power Betfair Plc’s announcement Wednesday that it’s in talks to expand into U.S. sports betting. William Hill Plc, seen by analysts as the most exposed to the measure, said the measure may cut its total gaming net revenue by 35 percent to 45 percent and lower annual profit by as much as 100 million pounds.
The machines are used by thousands of betting shops across Britain, and have helped offset a decline in revenue caused by the growth in online gambling. A 2-pound cap would force half of the U.K.’s 8,500 betting shops to close, with 21,000 job losses, and cost the horse-racing industry — which sells broadcasting rights to the bookmakers — 50 million pounds a year, according to analysis by KPMG.
It would have a “catastrophic impact on the future of retail betting,” the Association of British Bookmakers, which commissioned the KPMG analysis, said before the decision.
William Hill said about 900 of its shops, or 38 percent of the total, could become unprofitable as a result of the limit on bet size. Some of those would be at risk of being closed “within a relatively short time of the proposed staking change being implemented,” the London-based company said after the government announcement.
“The government has handed us a tough challenge today and it will take some time for the full impact to be understood, for our business, the wider high street and key partners like horse racing,” William Hill Chief Executive Officer Philip Bowcock said.
The government needs to give the industry “an adequate implementation period” for the new rule, gaming company GVC Holdings Plc said in a statement. The company doesn’t plan to seek a judicial review of the decision, it said.
Gamblers on the machines can currently stake 100 pounds every 20 seconds, and charities including GambleAware have long called for the government to reduce the maximum stake to remove the risk of gamblers losing thousands of pounds in a single session.
William Hill also is eyeing opportunities in the U.S. to replace lost revenue, after a Supreme Court judgment on Monday freed individual states to permit sports gambling. It’s preparing to roll out operations in New Jersey, which instigated the legal fight by repealing its gambling ban.
The U.K. Treasury also will lose tax revenue from the cap on bets, said lawmaker Philip Davies, who chairs Parliament’s cross-party group on gambling and lobbied against a 2-pound stake limit. The cap could mean a hit to the Treasury of 1.1 billion pounds over the next three years, and a loss to already cash-strapped local governments of 45 million pounds, according to the KPMG report.
— With assistance by Jess Shankleman