Minority government worsens industry outlook on FOBT stakes

The power of an “anti-FOBT parliament” to shape the decision of the ongoing cross-party review following last night’s election result has increased “the likelihood of a more painful position” for the industry when it comes to setting the maximum stake level, a leading analyst has told iGaming Business.

With a Theresa May-led minority government propped up by the DUP currently the most likely outcome of the hung parliament emerging from last night’s general election, “the DCMS review is going to come under more cross-party scrutiny”, according to Regulus Partners’ Paul Leyland, meaning that “the pressure for a DCMS review that is politically satisfactory has increased”.

A consensus-building reform that would not be challenged by the other parties would now be needed, he argued. “We know the DUP is anti-FOBT, and we know that the rest of the parties [the SNP, Labour and Liberals] have said so in their manifestos.”

With there also being an anti-FOBT element within the Conservative Party, “we have an anti-FOBT parliament” said Leyland, meaning that “if the government wants to put forward a proposed regulatory change that is obviously against the will of the parliament, they are going to get voted down, including by their own minority helpers that are trying to keep them in power”.

Therefore, said Leyland, “they will do something that they know will get passed and not cause a great rucus”.

While the all-party parliamentary group’s (APPG) report on FOBTs called for the maximum bet to be cut from £100 to £2, with this also being a Labour Party manifesto pledge, the government had prior to last night’s result been expected to recommend this should fall between £10 and £20.​ The UK’s Parliamentary Commissioner for Standards subsequently stated following a review that the APPG's report breached parliamentary standards.

Barclays’ analyst Patrick Coffey concurred with Leyland's view in a note this morning: “[I]f there is not a strong majority Conservative government, investors would worry that the probability of a max stakes cut to £2 has increased”. 

Simon French at Cenkos highlighted that while FOBTs are operational in DUP consituencies, “they have never been legalised there as the Gambling Commission’s remit does not cover Northern Ireland. At the very least therefore we could anticipate a crackdown on FOBTs in Northern Ireland and potentially into Great Britain if the DUP was to form a coalition, although we acknowledge that the issue is not likely to be top of their list of priorities.”

According to the most recent annual figures from the Gambling Commission, high-margin FOBTs generated £1.8bn (€2.1bn/$2.3bn) in GGY for UK bookmakers, only just behind the amount contributed by online betting.

Indeed, while there is a possibility the review could be sidelined by the government needing to prioritise more urgent and pressing issues, last night’s result also raises the scenario “that this can get done quickly, because everyone agrees on it”, Leyland added.

As well as increasing the possibility of a lower maximum stake being set when the review concludes, last night’s election result could also have further knock-on effects for a sector which finds itself under increasing political, media and regulatory pressure, the former argued.

“Positive regulatory reform needs a largish parliamentary majority, because it’s always contentious. We have written that off for five years'.

The minority government position means that all sector-related issues that will require attention from lawmakers during that time will be dealt with reactively, and therefore negatively, Leyland added.

“The puritan edges of the Commons will have a much stronger voice in deciding policy will have a much stronger voice than the middle ground. Any hope for positive, joined-up, well-thought-through gambling legislation has taken a pretty significant blow.”

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