Category: Gambling

After years of lobbying and debate, the Department for Digital, Culture, Media and Sport finally issued its much-anticipated Consultation on society lotteries and their financial limits on 29 June, via Tracey Crouch MP, the Minister for Sport and Civil Society.

The sector has long been campaigning for an increase in the financial limits which apply to society lotteries, which currently stand at annual total proceeds (ticket monies) of £10m, proceeds per draw of £4m and a maximum top prize of £25,000 or, if more, no more thank 10% of the proceeds. This effectively means that, at present no-one can ever win more than £400,000 as a top prize in a society lottery.

Of course, this is all designed to protect the position of the National Lottery as being the only lottery product where one might hope to win a life-changing sum. However the society lottery sector has argued that the current financial limits hamper its ability legitimately to raise money for good causes and the Government is now re-evaluating the position, recognising that society lotteries are “a fundamental part of the giving landscape” and acknowledging the views of many charities who say that money from society lotteries and the National Lottery are “complementary sources of funding that enable us, in different ways, to carry out our vital work.”

The Gambling Commission’s (“GC”) advice to Government is that the recent growth of the society lottery sector has not been to the detriment of National Lottery sales. The pervading view currently seems to be that the two can peacefully co-exist and that, indeed, the society lottery market might even encourage participation in the National Lottery.

This Consultation, then, seeks to enable the society sector to grow in a sustainable manner and in a way that is complementary with the National Lottery. The Government’s “preferred options” are to:

• increase the per draw sales limit to £5m;
• increase the annual sales limit to £100m; and
• increase the per draw prize limit to £500,000.

Whilst the annual limit is perhaps what the sector was after, many will be disappointed with the proposed modest increases for individual draws. The prospect of an increase to a £10m individual draw limit remains on the table, though – but so does cutting it to £2.5m, or leaving it as it is. Government is also looking at leaving the annual proceeds limit in place, or raising it only to £50m rather than £100m.

All of this only applies to large society lotteries, licensed with the GC. For small society lotteries registered with Local Authorities, the Government has no preferred view; instead, the Consultation suggests leaving matters as they stand (ticket sales of £20,000 per draw and £250,000 per year) or raising them to £30,000 or £40,000 and £400,000 or £500,000, respectively.

There is no doubt in my mind that this constitutes a pivotal point for the society lotteries sector and that what emerges as a result of this Consultation will shape its future for many, many years to come.

It is therefore essential that all in the sector and anyone with an interest in using lotteries (or raffles, which are the same thing in law) have their say before this Consultation closes at noon on 7 September. A link enabling you to do so is here:

https://dcms.eu.qualtrics.com/jfe/form/SV_6lieJGckYiFSrM9

We will, of course, report on the outcome in a future edition of our Newsletter.

Tracey Crouch’s announcement on 17 May regarding Fixed Odds Betting Terminals (“FOBTs”) will not have escaped your notice.

The Minister for Sport and Civil Society set out the Government’s proposed move to cut the maximum permitted stake on FOBTs (Category B2 machines) from £100 to £2. No definite date for the implementation of the change has been set, but it is expected to take effect within a year. The new limit can be introduced via secondary legislation, thus avoiding the need for the proposal to go through the protracted Parliamentary process which would be associated with amending the Gambling Act 2005 (“the Act”).

This is, without doubt, one of the greatest shake-ups for the gambling industry since the Act came into force in 2007, and it has left bookmakers examining which of their shops might cease to be profitable when stakes on FOBTs are slashed. Some operators estimate that as many as 40% of their shops will become loss-making as a result of the change, with “a proportion” being at risk of closure. There is talk of some 21,000 job losses, and of a reduction in the payments to support British horseracing of £290m, by 2020.

The move has also left the Treasury scratching its head as to how to cover the loss of revenue that will be felt between now and 2020. Machine Games Duty stands at 25% and estimates place the deficit at £1.1bn. The Government has said that it will increase Remote Gaming Duty (which is currently set at 15% of profits) to stop the gap, although the free-market think-tank, the Institute of Economic Affairs, has warned of “unintended consequences” of the reforms and predicted that taxpayers may have to make up the shortfall in Treasury income.

In reaching its decision, the Government pledged that it would “take a stand”. Culture Secretary, Matt Hancock, said: “When faced with the choice of halfway measures or doing everything we can to protect vulnerable people we have chosen to take a stand. These machines are a social blight.”

FOBTs currently enable players to gamble up to £100 every 20 seconds and, with 33,000 machines in betting shops and over 230,000 individual sessions in 2015-16 during which the player lost more than £1,000, they have commonly come to be referred to as the “crack cocaine of gambling”.

The Gambling Commission’s (“GC”) response to this FOBT announcement has been coloured by its formal advice to Government (provided under s26 of the Act), which was published on 19 March. The GC broadly recommended a reduction in maximum stakes (including those for Electronic Roulette) to £30 for games that have the potential for players to lose large amounts of money in a short space of time, with a reduction in slots stakes to £2.

The Government’s proposal therefore appears to go further than the GC’s suggestion. However, the GC also proposed other measures, such as limit-setting and tracked play across all machines. Much of the GC’s input has been accepted by Government, and this led the new GC Chief Executive, Neil McArthur, to say: “We’re pleased Government has supported a comprehensive package of measures to protect consumers, and that this includes a substantial stake cut. Whilst we welcome the reduced stake, that alone will not be enough to address the risks of harm that can come from all forms of gambling.”

So, in addition to the stake cut, Government is heavily engaging with the GC in improving player protection on Category B machines generally and, more importantly, online. This initiative specifically surrounds age verification, terms and conditions, identifying risks to players and customer interaction. In the absence of voluntary action, the Government has declared its intention, in collaboration with the GC, to force through legislation to ensure that operators comply.

Government also intends to crack down on gambling advertising and expects regulators, broadcasters and the industry to be compliant. A package will be rolled out this year, designed at protecting the most vulnerable, and will include a major responsible gambling advertising campaign.

Government has also commissioned a study to be carried out by Public Health England, to improve the available evidence on treatment for problem gambling – and it seems that the GC is likely to “strengthen” the current voluntary contributions system towards research into, education on, and treatment of problem gambling. I would not be surprised to see contributions soon becoming mandatory, and set as a percentage of turnover.

Finally, and this will be of interest to readers operating in the lotteries sector, the Government intends, as part of the next National Lottery competition, to assess whether the age limit for participation should be changed from 16 years old. One can only assume that the intention is to increase this to 18 years old. Whether this change will translate into the society lottery market remains to be seen.

We will, of course, keep a close eye on all developments and keep you informed in future editions of our Newsletter.

The maximum stake on fixed-odds betting terminals (FOBTs) will be reduced to £2 under new rules unveiled by the government this morning. Currently, people can bet up to £100 every 20 seconds on electronic casino games such as roulette. This change is focused on the impact it has on problem gamblers but it will have a dramatic effect on betting companies, and will reduce Government revenue from taxation by a significant amount too. The Gambling Commission recommended a medium ground of reducing the maximum stake to £30 and stated at the Woods Whur Gambling Conference that this was an evidence-based figure. However, the Government have ignored their experts and gone with the headline grabbing change.

Minister Tracey Crouch said reducing the stake to £2 “will reduce harm for the most vulnerable”. We will have to wait and see what impact this will actually have with problem gamblers/gambling and whether online gambling ends up being the winner for multi-platform operators.

High Street bookmakers have warned it could lead to thousands of betting shops closing. William Hill, which generates just over half its retail revenues from FOBTs, described the Government’s decision as “unprecedented” and warned that 900 of its shops could become loss-making, potentially leading to job losses. It said it’s full-year operating profit could fall by between £70million and £100million. Provision for this will have been made as the industry had expected this cut but hoped the Gambling Commission suggestion of £30 stake could save shops and jobs.

Tom Watson, Labour’s deputy leader and Shadow Secretary of State for Digital, Culture, Media and Sport, told the BBC’s Today programme: “The great tragedy of this is [that] for five years now pretty much everyone in Westminster, Whitehall and in the country has known that these machines have had a very detrimental effect in communities up and down the land. The bookmakers have chosen to take a defiant approach, trying to face down Parliament, really, with a very aggressive campaign.”

The Government’s consultation into gambling machines found consistently high rates of problem gamblers among players of FOBTs “and a high proportion of those seeking treatment for gambling addiction identify these machines as their main form of gambling”.

Ms Crouch said FOBTs were “an outlier in the world of high-street gambling because of the speed with which it is possible to lose large amounts of money” .She said the £2 limit would “substantially” reduce harm and protect the most vulnerable players. “Even cutting to £10 would leave problem gamblers, and those most vulnerable, exposed to losses that would cause them and their families significant harm.”

It will be very interesting to see how the betting industry reacts to these changes. FOBTs were originally introduced into betting shops before the Gambling Act 2005 was introduced. They successfully argued that these new machines were not bound by the stakes and prize limits of the time. They persuaded those who opposed them that they were not gaming machines but were a fixed bet due to the status of the determination of winners. A High Court challenge was fended off by a voluntary agreement as to the number allowed in each shop and a maximum stake and prize. This heightened status was preserved when they were categorised as B2 machines under the Gambling Act 2005.

The Betting Industry has proved itself to be innovative and prepared to fight for its position on the High Street. It will be interesting to be involved in the next stages of this story, which doesn’t seem to be over just yet.

To read the full review of gaming machines and social responsibility measures click on the link below.

http://www.gamblingcommission.gov.uk/news-action-and-statistics/news/2018/Government-review-of-gaming-machines-and-social-responsibility-measures-published.aspx