Government brings forward date of FOBT maximum stake cut to April 2019

The government’s embarrassment in being forced into a climbdown over the timing of the implementation of the new £2 maximum stake for FOBTs was on Wednesday matched by the pain of the bookmaking industry now facing an even sharper shock to their business.

Culture secretary Jeremy Wright on Wednesday announced the changes would be brought in next April rather than in October as had originally been planned.

An increase in taxes on online casino games, needed to offset the loss in tax revenue from the FOBT changes, have also been brought forward to April, resulting in a £100 million hit to the sector according to industry representatives.

The industry has warned of mass job losses and shop closures, and Ciaran O'Brien, William Hill director of communications, said the earlier introduction of the £2 maximum stake would only intensify that impact.

Reaction from racing was thin on the ground last night but the sport will undoubtedly feel the effect given the reliance on bookmaker profits for much of its annual income.

O'Brien said: "This decision has always been in the government's hands and, while it is disappointing to have had it brought forward twice now, we will have to do what we can in the allotted timescale to mitigate what will be a significant impact on our business and our shop-based colleagues.

"While we have a particularly challenging two years ahead of us during the transition as we reshape retail and invest in digital and the US, we will emerge a stronger and much more profitable business at the end of the five-year period."

The government's plan to make the changes next October, which was revealed as part of last month's Budget, led to the resignation of sports minister Tracey Crouch, who described the decision as "unjustifiable".

It was followed by a sizeable rebellion among Conservative MPs amid cross-party support for an amendment to the Finance Bill, forcing the government to change its mind.

Culture secretary Jeremy Wright

Wright's statement said: "The government has been clear that protecting vulnerable people is the prime concern, but that as a responsible government it is also right to take the needs of those employed by the gambling industry into account and provide time for an orderly transition.

"Parliament has, however, been clear that they want this change to be made sooner. The government has listened and will now implement the reduction in April 2019."

Theresa May: took a question on FOBTs during PMQsCredit: Clive Brunskill

The government's u-turn had been signalled earlier in the day by Theresa May during Prime Minister’s Questions.

Responding to Iain Duncan Smith, the prime minister said: "We are listening to the concerns being raised by colleagues."

Tom Watson: described climbdown as 'humiliating'Credit: Phil Harris / Mirrorpix

Labour deputy leader and shadow culture secretary Tom Watson said the decision demonstrated the "disastrous political judgement" of Wright and chancellor Philip Hammond.

He added: "It’s very sad that it took an honourable resignation of a good minister and a cross-party revolt to achieve the blindingly obvious and necessary reforms to Fixed Odds Betting Terminals.

"Whilst this is a personal humiliation for Jeremy Wright, this is a very good day for the many thousands of people whose families and communities are blighted by gambling addiction.

"Labour is proud to be part of a cross-party campaign to reform our gambling laws and we will continue to campaign for further improvements to regulation in the sector."

Tracey Crouch: 'Common sense has prevailed'

Crouch said she was "pleased that common sense has prevailed".

She added: "I am sorry that my views as the minister in charge of the policy were not heard but I am delighted that the collective voices of parliamentarians, faith leaders, victims of gambling addiction and their families, press and media commentators and many members of the public have been."

Wright said a statutory instrument to bring about the FOBT changes would be laid before parliament this week.

He added the government expected the gambling industry to work with it to reduce the effect of any impact on jobs.

The Association of British Bookmakers had hoped for a later implementation to allow more time for businesses to redeploy staff and save jobs where possible.

It claims the reduction in maximum FOBT stakes will result in up to 4,500 shop closures and 21,000 job losses.

Reacting to the news, an ABB spokesperson said: "Betting shops will comply with the timing that the government sets for the £2 stake implementation."

Clive Hawkswood said the decision was 'frustrating'

Remote Gambling Association chief executive Clive Hawkswood said in response: "The change in implementation dates will clearly be a blow for the LBO [licensed betting office] sector, but it is frustrating that no consideration at all seems to have been given to the fact that this also means the online gaming sector could now face an additional tax hit of around £100m, over and above the expected £200m-plus a year it had already been saddled with.

"To say we have suffered serious collateral damage would be an understatement."

Despite the news, bookmaker share prices rose. Paddy Power Betfair shares were up six per cent at 7,070p, shares in GVC Holdings – the parent company of Ladbrokes and Coral – rose by around 5.6 per cent to 821p, while William Hill shares rose 0.7 per cent to 187.2p.

What the announcement means

• The government has brought forward the implementation date for the reduction of FOBT stakes to £2 from £100 to April from October 2019.
  
  
• Betting shop operators have warned as many as 4,500 betting shops could close as a result of the decision to go to £2, with the loss of 21,000 jobs.
  
  
• To make up for the loss in tax revenues from FOBTs, the government had also announced that Remote Gaming Duty (RGD) – taxes on online casinos – will rise to 21 per cent from 15 per cent.
  
  
• Industry representatives say the decision to move forward the RGD rise to April will cost the sector an extra £100m.
  
  
• Government projections had estimated that in the 2020-21 fiscal year the increase in RGD would raise an extra £255 million for the Treasury, while the cut in FOBT stakes would mean £245m less for the government's coffers.
  
  

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